@toknormal and @VeritasSapere, the weird question I can't help but see is what if there is no fiat currency to peg against? How would a currency or what would a currency peg itself against?
Tante - that is a good point. Obviously then people would trade the bare asset like they always do in those kind of crises.
But then you've basically got a barter economy. If you're going to trade bare assets it could be anything - gold, bitcoin, bikes, eggs. Money in those situations in whatever people need the most.
Currencies are for when the lights are on, not off. For a non-crises situation, non weimar republic because although crises like that do happen (and we might be staring down the barrel of one right now), they're not a permanent state of affairs.
All I'm saying is that in advanced economies you have
layer upon layer of monetary media. Only the base layer is limited supply (or
was in the days of the gold standard). The rest have all kinds of properties that allow them to respond to liquidity demand in a controlled way.
To me, using a base asset as a currency is like riding a bike without tyres - you can do it but it ain't half going to hurt your a*ss
