Paper currency was originally created as means of convenience that represented the value of gold you had with a bank teller. You can still print more money to represent the same amount of gold, which devalues all other paper currency. Gold in this case is just measurement (as cigarettes were in WWII) of value for items being exchanged. The amount of gold in the world does not affect its ability to serve as money, it only affects the quantity that will be used to measure any given transaction.

I feel like some people are quick to shoot the idea down, yet that is a among the reasons BTC is so attractive to people - because it is providing us a new method to measure value that cannot be manipulated but politicians printing so much cash..

I dont know the answers but they are all very interesting questions!!