What is the value of the dollar backed by? Since gold and silver is no longer backing the dollar.?

Answer 1

It is backed by the fact that you need a dollar in order to invest in the United States.

Gold and silver were no different - you couldn't eat them or build houses with them (just like currency); they just happened to be global mediums of exchange. The key here is that it was harder for a nation to inflate their currency.

Answer 2

trolling for fundies is right.

The dollar is backed by the fact that to buy American goods or American services you need to pay in American money.

Just a couple of quick points to add.

The dollar is also backed by the stability and honesty of the United States Government. In much of the world you are just one military coup, one bad election, or one rebel uprising away from having all your assets siezed and everything your family owned stolen "in the name of the Revolution". (Just ask the Miami Cubans, or the Vietnamese residents of L.A.'s "Little Siagon", or the Iranians who backed the Shah, or the American Oil Companies who's property was siezed in Mexico in the 30s, or the Russian Oil Fields and the Venezuelan oil fields today.) Since we have rule of law in the U.S. that won't happen here, and everybody knows that.

The dollar is also "backed" so to speak by the military might of the U.S. Iraqi money became worthless after the fall of Saddam. South Vietnamese money lost value when Siagon went down the tubes. Iranian money wouldn't be worth a whole lot if they nuked Israel and Israel nuked them back. Expect a sharp drop in the Won and the Yen if North Korea attacks. That being said, the United States isn't going away any time soon, and everybody knows that too.

This means if you put your money into U.S. Banks, your money will still be there 20 or 30 years from now. It also means that if you invest in a U.S. company or U.S. land you can be pretty darn certian that the government isn't just going to come and sieze it.

That is why it is the prefered medium of exchange, there is a lot less political risk associated with the U.S. Dollar than there is with other currencies.

But if you want to invest in the U.S. you have to do it in dollars.
Hence the Dollar will retain value because the Dollar is your ticket to participation in the strongest and most stable economy on the planet.

Last note. Having your currency backed by Gold or Silver limits the money supply, and hence the size your economy can grow to. There simply is not enough Gold in the Earth's crust to come close to being able to back all the dollars we need to run an economy the size of the one we have today.

Answer 3

What backs the value of gold and silver? What good does a lump of metal do you? Those things have no "intrinsic" value any more than a $10 bill does. Things have value because and only because people have a demand for them.

The dollar is backed by demand among humans for the dollar, as a medium of exchange and a store of value.

Answer 4

Since we are no longer on the gold standard, the US dollar is largely determined by world opinion. So is the Euro.

China has been buying literal pallet loads of US dollars for many many years. They use them to purchase gold on the world market since the dollar yields more gold than the yuan.

China stockpiles dollars and gold. Eventually, China's yuan and economy will be backed by gold and silver, while the Federal Reserve Bank continues to print US money with nothing to back it.

The Federal Reserve is not governed, regulated, or reviewed by any US agency or entity including congress and the president. The Federal Reserve is not a government institution. It is a bank owned by a few powerful and private investors. They hold all meetings in complete secret and report to no one, yet they print all US currency.

John F Kennedy was about to bring the Federal Reserve under US government control when he had his head blown off in full view of the American people and the world.

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Answer 5

The dollar is a fiat currency backed only by the full faith and credit of the USA.

Answer 6

The full faith and credit of the US govt.