It's all fun and games until someone discovers ore deposits that would double world supply https://www.mining.com/web/uganda-says-exploration-results-s...

Why does the supply of money matter when it isn’t consumed? I understand why the supply of, say, steel is important: because we consume x tonnes of steel to create a building, so a limited supply of steel limits our ability to build new buildings.

However, when we use money we don’t consume it. It simply changes owner. Sort of moving through the economy unchanged in form.

> If you suck up all the money supply the economy might be stable in terms of inflation but it can't grow.

How do you explain the solid economic growth in the 40-year period 1870-1910, which happened during the international gold standard?

The gold standard (and by extension fiat because it is still very similar to a gold standard because of the existence of cash) causes artificial wealth transfers from the poor to the rich.

Let's say you own 1% of the gold of the economy. Notice that you also end up owning 1% of the savings in the economy. If an enterprising individual increases productivity and his company produces more, the value of gold will go up, leading to unearned gains in the value of your savings. Since you own 1% of the economy and the gold standard artificially enforces this against the will of other participants, you will gain a 1% share in the improvements of the company even though you have contributed nothing and taken away potential income from the entrepreneur. If the invention caused the economy to grow by 1% then the entrepreneur would expect to receive a 0.9% in the economy. That share would require everyone to give up 0.9% of their savings. Meaning your savings must go down to 0.91% of the economy. Of course, this doesn't happen in a gold standard which massively hurts the productive economy and that is exactly why there is a constant need to mine out more gold, to let new entrants into the economy as the old ones don't want to give up their gold and let it circulate in the economy. The gold standard is effectively a tool for violence and extortion.

Even under a gold standard, savings don't have to be in gold.

We don't all carry our savings in fiat cash (or central bank reserves) today, either.

You can save in bank deposits (denominated in gold, or fiat money, or whatever your bank offers), you can save by buying stocks, you can save by buying a house, etc.

A finite amount of gold is perfectly fine. Fractional reserve banking is a thing, and allows us to create arbitrary amounts of money, even in a gold standard setting.

This has worked really well in the past in eg Scotland and Canada.

Also, the price level can adjust.

Basically, you want to be able to control the quantity of money, because it's a key element of monetary policy. Monetary policy is a tool that governments use to counter boom and bust cycles, so economic cycles are smoother, and to maintain price stability. Under a metallic standard, monetary policy is much more limited. As far as I know, a central bank can still sterilise inflows of money that result from a trade surplus with the rest of the world, and release its reserves, as a way to influence the quantity of money, but it's a lot harder.

Monetary policy is still very much possible. Though it's perhaps best left to the private sector.