By the money price of goods it is to be observed, I understand always, the quantity of pure gold or silver for which they are sold, without any regard to denomination of the coin.

but I disagree I think the point of his quote is that whatever the backing of the money is it must have a known and consistent value. In Book I Chapter IV Smith makes the point that a commodity only has the value that people assign it. He furhers that point in Book I Chapter 5

The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. What every
thing is really worth to the man who has acquired it and who wants to
dispose of it, or exchange it for something else, is the toil and trouble
which it can save to himself, and which it can impose upon other people.
What is bought with money, or with goods, is purchased by labour, as much as what we acquire by the toil of our own body. That money, or those goods, indeed, save us this toil. They contain the value of a certain quantity of labour, which we exchange for what is supposed at the time to contain the value of an equal quantity. Labour was the first price, the original purchase money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of’ labour which it can enable them to purchase or command.

Smith is also credited as the creator of the Real Bills Doctrine which, given the era and the state of banking at the time, I think is consistent with a “fiat currency”. But I am not an economist so take my interpretation for what it is worth. I do know that Smith was pro growth and that the evidence points to a hard currency slowing economic growth so I think he would be a diorty moneyist like me.

To complicate things even more, now that we are in the digital age, dollars are now no longer paper, but rather digital “funds” which are beamed from one bank to another. Trade would accompany that idea rather than a static metallic value.

That is something to think about…

My edition is the Bantam Classic with the foreword by Alan B. Krueger and I am specifically referring to Book 4 Political Economy. As I said I am just skimming at the moment but this is the telling quote so far:

A nation may import to a greater value than
it exports for half a century, perhaps, together; the gold and
silver which comes into it during all this time, may be all
immediately sent out of it; its circulating coin may gradually
decay, different sorts of paper money being substituted in its
place, and even the debts, too, which it contracts in the
principal nations with whom it deals, may be gradually
increasing; and yet its real wealth, the exchangeable value of
the annual produce of its lands and labour, may, during the same
period, have been increasing in a much greater proportion. The
state of our North American colonies, and of the trade which they
carried on with Great Britain, before the commencement of the
present disturbances,

(thank god for gutenberg.org) That is from Book 4 Chapter III

Jeremy,

There I am working offsite today and dont have the book with me I will post a reply tonight.