The First of Many

Maybe for the same reason WHEN Gold Backed US Dollars existed.

As long as you COULD Freely get gold (and Silver for silver backed) that US Dollar was easier to carry and use than Gold.

You COULD BUY a penny candy and get change. Try that with a gram of gold. Also, even back then fake gold existed so folks might want to check the accuracy of that gold value? So even with gold, trust was needed.

Money runs on TRUST. Prior to the “Federal Reserve” (SPIT) there was local banks everywhere. Some were carefully managed and did decent service for their area. Others got “Creative” issuing Money backed by too few real Gold Deposits and lost the TRUST-Faith of their folks and failed. Those banks LOST Folks money.

Oddly enough current laws make it “Legal” to run Banks on “Fractional Accounting” where they can loan a massive leverage out for interest with a tiny fraction ACTUALLY in Deposit. A STUPID IDEA but “Special Interests” with deep pockets buy CONgressmen.

Back then a BANK RUN was folks lined up to GET THEIR GOLD BACK. Oh, MY where is it stuff. The overextended banks failed, and folks LOST their Gold. A LOT like Current “I OWN Gold held in this “Vault” see my pretty documents?

One of the few things FDR the socialist did to “Restore” faith in Banking after many bank runs and failed banks losing the money of Americans was the Federal Deposit Insurance Corporation FDIC. It made BANKS buy insurance to cover banking failures.

FDIC like all laws has been corrupted by “Special Interests” and can barely cover even a tiny fraction of those 250,000 dollar “protection” if even a small percentage of banks had a failure. Thus, the newer laws to “Allow” banks to USE Depositor’s Moneys to Restore the Banks without Taxpayer money support (SPIT).

All Businesses USE Credit daily to buy equipment, supplies and stuff like toilet paper with payment rendered in a month (or in the case of the US Government a much longer timeframe (was once I KNOW 6 months service delivered to actual check cut).

That and as of today I cannot go and buy a package of toilet paper in Walmart with a gram of gold and expect change? Like the old barter story of cutting off a “leg” from my trade pig to buy something.

Even back in the age of the good Samaritan there was non-gold non-silver money in the form of accepted trade tokens made of copper, bronze and even script. During the US Depression some towns had town money to allow services rendered between town folks to be valued and traded.

Much easier than promising Joe’s son will come by upon demand and weed the garden for a sack of potatoes today.

Even when siler coinage (Pre-65) was regular money it was TRUSTED because it was ISSUED by the US Government (back when trust and pride of Being American was common).

So, you KNEW that coin silver quarter was really 10% copper and 90% silver. Not silver-plated slugs.

Sorry for an abbreviated version of practical economics and money history.