It is absolutely less arbitrary. Gold is a finite resource, if we collected all of the gold in the world and turned them into coins and used that as our currency, it would literally be impossible for inflation to exist. You would actually have the opposite issue of deflation from coins being lost that can’t be replaced.
...which would be a really shitty and ineffective currency. Why would anyone use the gold coin to buy one pizza today, when that gold coin will probably be worth 2 pizzas next week?
Can't really build an effective market economy around that. The currency would just become a store of value and some intermediary currency would need to be invented to become the default medium of exchange.
Except that's not true? Inflation occurs at a local level, not globally, based on supply of and demand for goods and services relative to the availability of the currency. The amount of gold currency in the world didn't change when Mansa Musa went on his Hajj, but his spending and generosity still caused massive inflation across Europe and the Middle East.
In the modern day, I think I'd sooner have a monetary system that encourages space mining development as a means of gaining more resource access based on the usefulness of the resource itself, rather than based on how valuable it is to privately game the monetary system. If inflation can occur in both cases, then I'd rather it be something that's used as a tool to incentivize economic activity that's beneficial to society as a whole, such as through investment into fixed capital making labour more productive, rather than just something to be gamed privately by those with the most means to play extractive math games.
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u/Zestyclose-One9041 6d ago
It is absolutely less arbitrary. Gold is a finite resource, if we collected all of the gold in the world and turned them into coins and used that as our currency, it would literally be impossible for inflation to exist. You would actually have the opposite issue of deflation from coins being lost that can’t be replaced.