Convertibility has always been based on a fundamental misunderstanding of money, and always fails because it's a flawed concept (and requires fixed exchange rat

Convertibility has always been based on a fundamental misunderstanding of money, and always fails because it's a flawed concept (and requires fixed exchange rates, which is always a bad idea). Money has always been based more on representing debt than actually having intrinsic value (that misunderstanding comes from the barter myth, that pre-money economies had markets that used barder, which there is little anthropological evidence for - see Debt: The First 5000 Years for a pretty good overview). As for now, the US dollar has a baseline demand because all business and income in the US requires taxes to be paid to the Government in US dollars, and all spending by the Government happens in dollars. The rest of the domestic economy emerges out of that, just as market economies always have. The value of the dollar is effectively ultimately 'backed' by the goods and services produced by the US economy. Herein lies the problem with convertibility - why would we expect that the amount of gold the Fed corresponds to the size of the economy? It won't, so the value will always diverge and hence how the system failed (more than once).