UN to produce bullion coins as world currency

No, and this is begging the question.

http://www.nizkor.org/features/fallacies/begging-the-question.html

The US dollar used to represent a fixed amount of bullion metal. When this relationship was terminated, the paper notes ceased being receipts for real gold specie and became a fiat currency. They kept the name, but it's a paper currency as of 1920.

What's that have to do with the fundamental instability of paper currency? If gold is minted in poor countries it doesn't lose its value.

I'm interested to see if you can find a counter-example.
http://en.wikipedia.org/wiki/List_of_circulating_currencies

To my knowledge every currency there is worthless paper. Whereas before the 20th century almost every currency of merit was gold, silver or copper based.

The commodity chosen for money gains a monetary premium, in that demand is higher for the sole purpose of mediating exchange. But the monetary premium cannot become disconnected with the underlying value / fundamentals of the commodity.

For example, in Brazil during their currency crisis in the 80s, when inflation was running at 1000% per year, farmers in the Cerrado bought and sold and valued their land in bags of soy beans. Land and commodity prices are still quoted in some places as "bags of soybeans". [1]

1. http://www.ag.ndsu.edu/pubs/agecon/market/eb79w.htm#currency

But if it were to become the case that soybeans were found to be completely toxic and useless for every purpose tomorrow, for some unknown reason, their use as currency would desist immediately. People would dump soybeans in the ocean and replow their fields and grow something of value.

In prisons and during both world wars, cigarettes gained a monetary premium as they became the emergent currency. The demand is increased, in so far as people who do not smoke demand to be paid in cigarettes for their goods and services, in the anticipation that they can sell the cigarettes for what they actually want at a later date. But again, if the cigarettes all went off, or smoking was strictly banned (assuming a 100% effective ban), then their commodity value would be eliminated and the monetary value would instantly collapse with it.

So hard money isn't inherently worthless; quite the opposite. It's inherently valuable, which is why it becomes money in the first place. The monetary value of a commodity money remains a function of it's commodity value.

The only reason paper money has value at all is because the commodity it represents is you. A dollar bill is a governmental bearers bond representing future resource extraction from you.

Here's a free audiobook on the topic of hard money and banking and how governments have instituted counterfeit 'paper' money over the last 100 years:
http://mises.org/media.aspx?action=category&ID=92

 

You want to know what works and doesn't work?

http://en.wikipedia.org/wiki/Mississippi_Company

http://www.scribd.com/doc/17230218/Banknotes-of-the-French-Revolution-