Is the American Dollar still backed by Gold, or how does it work?

Question

why isn;t it backed anymore?

Answer 1

The American Dollar is backed by the "full faith and credit of the United States," which is to say that it is not backed by gold. Dollars have value because people accept them as payment for goods and services on the expectation that they others will do likewise. I hate to tell you (not really) that those pieces of paper in your wallet are just pieces of paper, nice paper but paper nonetheless.

Answer 2

Us Dollar Backed By Gold

Answer 3

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RE:
Is the American Dollar still backed by Gold, or how does it work?

Answer 4

No, while it is fiat money, it is non-interest bearing debt of the United States Government. It is backed by interest bearing debt of the United States and more broadly by your credit cards, mortgage, car loan, and the commercial loans of businesses. If the Federal Reserve Banks believe the economy needs more money, they buy up interest bearing government loans and exchange them for money, which is non-interest bearing government loans.

It was backed by gold until 1971. Americans could not redeem in gold, generally, since 1933 but foreigners could. The US went off gold because under the Bretton Woods system, governments exchanged either dollars or gold, but the US could only exchange gold since it could print an infinite amount of dollars, destroying their value. However, this drained the US gold supply to the point we left the gold standard. The largest reason for leaving gold however is that it was the primary cause of the Great Depression and the US has been wary of gold ever since.

Answer 5

Simply put, it is worthless, or to be precise, a paper dollar is "worth less" today than it ever could have been conceived to have been (33-38 cents, depending on the day "almost precisely" haha) because it is no longer "backed" by gold, nor any other precious and rare commodity. When my husband and I were young, the economy was mentioned often BUT we never saw printing presses, NO!, we saw brick, after shiny brick of perfect GOLD on the same belts that your children and grandchildren will witness Monopoly-looking money that they can use to pay triple for items each week! That's progress!

Answer 6

The U.S. dollar is backed by pixie dust from fairies deep in the Antarcrtic region of the earth.

These fairies were first discovered by Prescott Bush in early 1934 during an expedition by the Skull & Bones fraternity while searching for a new 3rd baseman for the upcoming Yale/Harvard grudge match. (Prescott HATED the Crimson).

While venturing into a cave isolated inside of a glacier he stumbled upon these magical fairies, which at that time he referred to as "fiddle-whistles".

Bush and his fellow expeditionists were first intrigued by the fairies' vast amount of knowledge on baby birds as well as U.S. professional bowlers. However it wasn't until Prescott stuck his thumb finger into the anus of one these fairies, that they began to cough up the magical dust that the wonderful U.S. currency has since been backed by. It was also how he developed the nicknames "bum-thumb Bush" and "fire-fingers", which tragically stuck with him for the rest of his days.

If you would like to know more about the U.S. Dollar and all of the magic America has to offer, just ask the government. Or CNN. They're buddies, and usually come to the same conclusions.

Until then, all hail the great and powerful Bush Family, especially Grampa Fire Fingers.

Answer 7

The American dollar is backed ONLY by the good faith of the U.S. government! It is not backed by gold.

Answer 8

No, we ended the gold standard in 1933. "how does it work?" Please clarify.

I will assume you mean, How do our US dollars have value if it they are not backed by gold?

Some of the other contributors say faith in the 'government'. But it's more than that nowadays. We accept paper currency because we believe that we can buy stuff with it. So the faith that they refer to is really the belief that 'people' will accept our money.

p.s. One of the other contributors said "But, gold is a fiat system itself. Gold only has value to humans just like American money." Although gold has many similarities to fiat currency, its differences are great enough to require a separate definition.

Fiat money is currency that the "government" deems valuable on faith. Represenative currency is money that the "market" deems as valuable on trading strength. So its wrong to say that gold behaves like fiat currency. If one were to make an argument that money today isn't what it seems, the argument would go in favor that our paper money today behaves more like gold-backed currency; since it now has a store of value equal to real commodities.

Answer 9

It's not backed by gold, nothing for that matter, which should you to the next question why are we taxing money as we can print more of it based on nothing...

Answer 10

American money is a pure fiat system. It is not backed by gold. But, gold is a fiat system itself. Gold only has value to humans just like American money. If you want to increase the money supply in a gold backed system, then you dig up more gold. If you want more money in a pure fiat system, then you print more money. Both are very similar.