Gold & Silver have been money for thousands of years. Their function as money came about on the free market. That's something we're not used to these days. Today, we're forced to use green pieces of paper as money, because that's what the government makes us use.
So let's go through the process of how gold and silver became money. We'll use the words of Murray Rothbard from his classic work titled "What Has Government Done To Our Money"...(download the digital version for FREE here).
It is clear that in every society, the most marketable goods will be gradually selected as the media for exchange. As they are more and more selected as media, the demand for them increases because of this use, and so they become even more marketable. The result is a reinforcing spiral: more marketability causes wider use as a medium which causes more marketability, etc.Now what exactly make gold and silver the most marketable money? Well, they both transport easily, are relatively scarce, are not perishable, can be easily stored, and are divisible.
This all had to be worked out by market participants. It didn't happen overnight.
Eventually, one or two commodities are used as general media —in almost all exchanges—and these are called money.To help drive the point home here, let's look at an example that we're all familiar with: the dominance of Facebook & Twitter as digital communication tools.
As more and more people selected Facebook and Twitter, the demand to use them increased. Celebrities began to use them, businesses found great value in them, and now it's hard to find a person that doesn't use one or the other.
Back to money:
Historically, many different goods have been used as media: tobacco in colonial Virginia, sugar in the West Indies, salt in Abyssinia, cattle in ancient Greece, nails in Scotland, copper in ancient Egypt, and grain, beads, tea, cowrie shells, and fishhooks. Through the centuries, two commodities, gold and silver, have emerged as money in the free competition of the market, and have displaced the other commodities.There were also plenty of other "social networks" to choose from. There was Compuserve, Usenet, Bulletin Boards, Friendster, MySpace, and many others. Yet Facebook and Twitter have displaced them all.
Back to gold and silver:
In recent times, silver, being relatively more abundant than gold, has been found more useful for smaller exchanges, while gold is more useful for larger transactions. At any rate, the important thing is that whatever the reason, the free market has found gold and silver to be the most efficient moneys.Twitter is useful for short 140 character messages. It's great for broadcasting to the world. Facebook is more useful for longer messages, sharing pictures, and focusing on smaller groups of people that you most likely know. Whatever the reasons, the important thing is that the free market found these two to be the best.
This process: the cumulative development of a medium of exchange on the free market—is the only way money can become established. Money cannot originate in any other way, neither by everyone suddenly deciding to create money out of useless material, nor by government calling bits of paper “money.”Can you imagine the reaction if government decreed what everyone must use to communicate digitally? Everyone (other than the die hard power worshippers) would just shrug their shoulders and tell government to hit the bricks!
And yet we allow government to dictate and force us to use money that they control. Money that they create by the trillions, robbing us of purchasing power and driving up prices. They create booms & busts in our economy, and print to the high heavens to fund their gargantuan welfare state & military empire.
Now....must gold & silver be money? Must Facebook & Twitter be our digital communication tools of choice?
But if others are to replace them, it should occur by choice in the free and voluntary marketplace.
No force. No government decrees.
In other words, it's well past the time for government to get its hands off our choice as to what to use as money!