I hear some economics arguing that currency should be pegged to gold as a way of ensuring that its value isn’t arbitrary / volatile but I don’t understand how this would solve the problem. I understand that gold is a scarce resource that is difficult to mine but is it this alone that gives it intrinsic value ?
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Gold is fairly uncommon, sure, but the real value the gold has is the fact that *people think it’s valuable*. Because people are willing to trade gold for other things of value, that gives gold value as money. If everyone tomorrow just decided that that was dumb, gold wouldn’t have the value it has anymore.
(Gold still has value industrially even if it doesn’t have value as money, which is annoying if you need to use gold for industrial purposes.)
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