Amidst all the talk about the Federal Reserve's high interest-rate policy to combat its many years of monetary expansion and debasement, some people advocate the restoration of the monetary system on which the United States was founded — one in which, they say, the dollar was "backed by gold."

But there is one great big flaw in that idea: Under America's founding monetary system, the dollar never was "backed by gold." Instead, the official money of the nation for more than 125 years was gold coins and silver coins. Those coins didn't back anything because they constituted the nation's official money itself.

The Framers wanted nothing to do with paper money. They knew that historically paper money had been the way that governments had plundered and looted people through monetary expansion — that is, inflation of the paper-money supply. By printing up ever-increasing amounts of paper money to fund its operations, the government's inflation of the money supply would cause the value of everyone's money to fall. That decrease in value would be reflected in rising prices of the things that money would buy.