In a nobler time, principle and norms constrained behavior. A government could be "trusted" to maintain a gold peg on its currency because it was obvious to most involved that to undermine that norm would be to liquify the foundations of society.

It's a nice thought that at some point people had this kind of foresight and restraint. Whether this was ever truly the case or not is irrelevant, because it certainly isn't any longer. We live in a time that has largely forgotten the hazards of an unconstrained currency.

But what hasn't been forgotten is the street-smart notion of counterparty risk, and this disqualifies gold from any serious role in backing a currency.

For a few reasons the idea that governments will ever return to a gold peg is fantasy. But even if, who would take such a peg seriously? A mostly-benevolent hegemon like 1900s America repeatedly violated expectations about gold convertibility. Is China today more trustworthy?

If there's going to be an asset that lends any discipline to currency, it has to be something that can be "physically" settled immediately and for little cost. It has to mitigate counterparty risk to the extent possible, and its supply can't be made to expand.

You'll know such an asset when it comes because nations who are otherwise great enemies have a mutual trust in it.

Beijing would never custody gold at the New York Fed, but to revert to a gold-backed currency would require long periods of this kind of vulnerability. Nonstarter.

There is an obvious candidate for such an asset. The fact that anyone can today go out and buy this candidate in arbitrarily small quantity, regardless of how central they are to the existing financial regime, is profoundly hopeful.