alt Hacker NewsWhat @cheeseomlit said, plus: During the Age of Exploration/Colonization, competing European powers each minted metal currencies and couldn't reasonably debase their metals without immediately being out-competed (which is why the trusted purity of Spanish gold and silver coinage slowly dominated). The primary mode of failure for those empires was bankruptcy via war. The impossibly high cost of fielding armies around the globe was laid bare during that era. Paper money lets us (funnily enough) paper those costs over and live with the illusion that it's all a free lunch. But what we're actually doing today is debasement, and eating, vociferously, all of the deflationary efficiency gains won by 20th century technological progress.
> During the Age of Exploration/Colonization, competing European powers each minted metal currencies and couldn't reasonably debase their metals without immediately being out-competed
You're hitting the nail on the head. Metalness didn't matter. It was competition in money supplies (and strength of private property).
The fact that a banker in Italy could finance (or not) a war by Great Britain is what restrained governments. Same as in the 1990s, the bond market was king.
The historical record simply does not support the hypothesis that metal-based economies are more peaceful or inflate less than modern fiat-based ones. I'm open to revising that opinion if someone has re-run the data. But everything I've seen comes from blogs that start with the conclusion, itself reached from assumptions from first principles that rarely contemplate how armies were actually financed in antiquity. (Hint: they take your shit. Marketing campaigns sharing the martial term isn't a coincidence. If you're a general in the olden times, you got wealthy through your commission because your army took the enemy's shit. If you needed help getting there, you paid a 'friendly' visit to your nobles.)