Question about US currency

[weiv0004]

Was having a discussion about diamonds the other day. Somehow that discussion evolved into the value of US Currency and eventually, what is the US Dollard backed by? I was under the assumption that the dollar was backed by gold deposits, but my friends argued otherwise, and I do realized that my beliefs were kind of foolish. I'm sure the US doesn't go out and buy a dollars worth of gold whenever a new dollar is added to circulation. Anyways, does anyone have any info on what backs the US Dollar? Is it just faith in the government at this point?

 

[Heisenberg]

It used to backed by gold, yes. Now it just has value because the US government says it does.

 

[0]

There's a reason its called a 'greenback'...

 

[keeleysam]

Legally it is just the economy of the country.

 

[Ika]

The US went off the gold standard around 50 years ago, I believe. Roosevelt.

 

[Conky]

Originally posted by: Aflac
The US went off the gold standard around 50 years ago, I believe. Roosevelt.

Yep, and yet they still have pallets and pallets of dust covered gold in Ft Knox. It's pretty silly really.

 

[bctbct]

Hasnt been payable in gold since 1928 IIRC

 

[JS80]

it's backed by the US armed forces. that's what it's backed by.

I don't think there's a first world country's currency that's backed by anything. Most money is fiat.

 

[FoBoT]

it is back by the full faith and confidence of the US govt.

sure the govt. has assets, but the face value of US currency in circulation far exceeds the govt. assets, especially if you subtract the national debts

 

[Pepsei]

and it's crappy that North Korea is making super dollars (counterfeit) to 1. destablize our economy, and 2. buy almost anything they want.

 

[IronWing]

Originally posted by: Pepsei
and it's crappy that North Korea is making super dollars (counterfeit) to 1. destablize our economy, and 2. buy almost anything they want.

If they really wanted to destabilize our currency they would release DollarPro - print your own money! More seriously, cash makes up such a small part of our payment system that I don't think counterfitting would have much inflationary effect.

 

[her209]

I can't wait til we move to an all electronic system.

 

[Pepsei]

Originally posted by: ironwing

Originally posted by: Pepsei
and it's crappy that North Korea is making super dollars (counterfeit) to 1. destablize our economy, and 2. buy almost anything they want.

If they really wanted to destabilize our currency they would release DollarPro - print your own money! More seriously, cash makes up such a small part of our payment system that I don't think counterfitting would have much inflationary effect.

i guess you're right... they want to spend their fake money somewhere.

 

[Alkesh]

it's known as Fiat money i.e. money by decree. Fiat Lux = Let there be Light.

 

[FeuerFrei]

In 1933-34, the federal government declared its owner­ship of all U.S. monetary gold, ordered citizens to surren­der it for paper money, outlawed acquiring it "except under license," and required those still holding it to swear in writing what they had and where it was. Ameri­cans could no longer redeem dollars in gold. The government took in $300 million of gold coin and $470 million of gold certificates by 10 May.

Foreign banks could still redeem dollars for US gold but not private citizens.

 

[everman]

It's a good place to keep your money, along with other currencies like the British Pound. Stability is key.
Just think about what would happen if the dollar lost most of its value, the world economy would collapse, we'd probably have wars and generally a really bad situation.
There's a lot of money stored not only in dollars, but also in US government bonds.

 

[Thorny]

Originally posted by: FeuerFrei
In 1933-34, the federal government declared its owner­ship of all U.S. monetary gold, ordered citizens to surren­der it for paper money, outlawed acquiring it "except under license," and required those still holding it to swear in writing what they had and where it was. Ameri­cans could no longer redeem dollars in gold. The government took in $300 million of gold coin and $470 million of gold certificates by 10 May.

Foreign banks could still redeem dollars for US gold but not private citizens.

Yup, we went from fractional reserve to fictional reserve, and the government's been laughing all the way to the bank since. Now the government has a new TAX called 'inflation' and the average joe tax payer doesn't even realize it. Of course they control the public schools which conviently omit teaching real economics, so people don't even realize whats going on. Take oil for example. People think gas is high because of middle east tension, low reserves ect. How about the fact that the US Dollar is only worth 70% of what it was 5 years ago??? Oil went up, but the value of the dollar fell at the same time. Why you ask, because the Fed can print as much money and sell as many bonds as they want because they don't have to back it with a reserve. Oh, and for those of you that say "The fed says inflation is under control and is at an acceptable level" I ask this. Who reports on the inflation rate?? Who releases the numbers that are used to figure inflation?? Yup, you guessed it, awful convienient ain't it

Of course, this is all IMHO. I'm a goldbug and am exceptionally biased against our governments economic policy, so take that for what its worth.

 

[JS80]

Originally posted by: Thorny

Originally posted by: FeuerFrei
In 1933-34, the federal government declared its owner­ship of all U.S. monetary gold, ordered citizens to surren­der it for paper money, outlawed acquiring it "except under license," and required those still holding it to swear in writing what they had and where it was. Ameri­cans could no longer redeem dollars in gold. The government took in $300 million of gold coin and $470 million of gold certificates by 10 May.

Foreign banks could still redeem dollars for US gold but not private citizens.

Yup, we went from fractional reserve to fictional reserve, and the government's been laughing all the way to the bank since. Now the government has a new TAX called 'inflation' and the average joe tax payer doesn't even realize it. Of course they control the public schools which conviently omit teaching real economics, so people don't even realize whats going on. Take oil for example. People think gas is high because of middle east tension, low reserves ect. How about the fact that the US Dollar is only worth 70% of what it was 5 years ago??? Oil went up, but the value of the dollar fell at the same time. Why you ask, because the Fed can print as much money and sell as many bonds as they want because they don't have to back it with a reserve. Oh, and for those of you that say "The fed says inflation is under control and is at an acceptable level" I ask this. Who reports on the inflation rate?? Who releases the numbers that are used to figure inflation?? Yup, you guessed it, awful convienient ain't it

Of course, this is all IMHO. I'm a goldbug and am exceptionally biased against our governments economic policy, so take that for what its worth.

wow, you must have a PhD in Soviet Economics.

 

[Thorny]

Originally posted by: everman
It's a good place to keep your money, along with other currencies like the British Pound. Stability is key.
Just think about what would happen if the dollar lost most of its value, the world economy would collapse, we'd probably have wars and generally a really bad situation.
There's a lot of money stored not only in dollars, but also in US government bonds.

A lot of foriegn currencies use the USD as thier reserve for thier fake paper money. When they lose faith in the USD they will sell them for whatever they can get for them. Supply and Demand will kick in quick and by the time you wake up, your $1 bill will be worth 50 cents. I say when not if, because this country has a serious finiancial problem that I believe will end with the dollar crashing. And yes, war will probably follow close behind when it happens.

 

[Jadow]

Just think about what would happen if the dollar lost most of its value, the world economy would collapse, we'd probably have wars and generally a really bad situation.

The dollar is down about 20%, coincidently, we've invaded Iraq.

 

[Thorny]

Originally posted by: JS80

Originally posted by: Thorny

Originally posted by: FeuerFrei
In 1933-34, the federal government declared its owner­ship of all U.S. monetary gold, ordered citizens to surren­der it for paper money, outlawed acquiring it "except under license," and required those still holding it to swear in writing what they had and where it was. Ameri­cans could no longer redeem dollars in gold. The government took in $300 million of gold coin and $470 million of gold certificates by 10 May.

Foreign banks could still redeem dollars for US gold but not private citizens.

Yup, we went from fractional reserve to fictional reserve, and the government's been laughing all the way to the bank since. Now the government has a new TAX called 'inflation' and the average joe tax payer doesn't even realize it. Of course they control the public schools which conviently omit teaching real economics, so people don't even realize whats going on. Take oil for example. People think gas is high because of middle east tension, low reserves ect. How about the fact that the US Dollar is only worth 70% of what it was 5 years ago??? Oil went up, but the value of the dollar fell at the same time. Why you ask, because the Fed can print as much money and sell as many bonds as they want because they don't have to back it with a reserve. Oh, and for those of you that say "The fed says inflation is under control and is at an acceptable level" I ask this. Who reports on the inflation rate?? Who releases the numbers that are used to figure inflation?? Yup, you guessed it, awful convienient ain't it

Of course, this is all IMHO. I'm a goldbug and am exceptionally biased against our governments economic policy, so take that for what its worth.

wow, you must have a PhD in Soviet Economics.

I'm selling memberships to my newletter

I also sell very nice tinfoil hats...

 

[chrisms]

I thought Nixon took us off the gold standard. What is this about the 20s and 30s?

 

[bctbct]

Originally posted by: chrisms
I thought Nixon took us off the gold standard. What is this about the 20s and 30s?

not unless he was prez in 1933 when the Gold Reserve Act went into effect.

 

[harobikes333]

Link on the issue at hand FTW

 

[Jadow]

Originally posted by: chrisms
I thought Nixon took us off the gold standard. What is this about the 20s and 30s?

Nixon let the dollar float.