Gold is commodity. The financial system is an industry that provides goods and services. Gold is not an alternative to the financial system. How could it be? It's a completely different thing.
Not sure what OP was specifically referring to, but the argument is true in the sense that pre-1971, gold was money and currency was backed by gold. Now money is whatever the Fed says it is, and currency is backed by faith.
The difference between relying on credit backed by a physical item (gold bricks) versus credit backed by "the Full Faith and Credit" clause of the Constitution is what happens in the event of default by the issuer of the credit. If the wheels stop turning at some point, there is no recoverable asset.
You're confusing macro-economics with micro-economics. There is "no recoverable asset" with currencies and currencies aren't debts that demand payments.
You are. You are conceptualizing currency as debt, as if currencies represented finite deposits of gold which implies the value of the currency. Even with the gold standard, governments still decide the value of the currency.
Doesn't seem like I'm confusing the two. Regardless of how the value was decided, you could still get gold in exchange for paper currency through the Treasury at the fixed rate. You can't do that today, because the money isn't backed by gold.
