What is our money backed by??

[Chris Castineira]

Today me and a few buddies got to talking and we got into a bit of a debate. I am hoping that someone on here would know. My buddy said that the US's money is still backed by gold, I could have sworn that they did away with thi practice and that it is backed by something else. Anyone know anything about this. Thanks friends.

CHRIS

 

[Jim parnell]

the full faith and credit of the US government

 

[Michael Cacioppo]

jimp has it 100% right. I don't believe any present country has their currency back by tangible assets.

 

[TrainTrac]

Nothing. It's fiat money. FDR (D) took our money off the gold standard in 1933.

In early 1933, in order to fight severe deflation Congress and President Roosevelt implemented a series of Acts of Congress and Executive Orders which suspended the gold standard except for foreign exchange, revoked gold as universal legal tender for debts, and even banned private ownership of significant amounts of gold coin. These acts included Executive Order 6073, the Emergency Banking Act, Executive Order 6102, Executive Order 6111, the Agricultural Adjustment Act, 1933 Banking Act, House Joint Resolution 192, and later the Gold Reserve Act[6]. These actions were upheld by the US Supreme Court in the "Gold Clause Cases" in 1935[7].

Ever since, our money has been on a fiat standard, which basically means that a piece of paper that looks like a dollar is worth one dollar because we say so.

Today, like the currency of most nations, the dollar is fiat money, unbacked by any physical asset. A holder of a federal reserve note has no right to demand an asset such as gold or silver from the government in exchange for a note. Instead, the currency is backed by future claims to wealth of American taxpayers and other income sources of the Treasury. [12] Consequently, proponents of the intrinsic theory of value believe that the dollar has little intrinsic value (i.e., none except for the value of the paper) and is only valuable as a medium of exchange.

 

[Rodger Tellefson]

TrainTrac is correct.

 

[Nelson Atwell]

The Euro is even worse. It isn't even backed by a national government. It is backed by a central bank that was created by numerous governments. They could just decide to dissolve it some day in the future and revert to their old currencies. If that happened, they could just refuse to honor it and say it has no value.

 

[Jack Wiley]

Our country or rather President Nixon ended the relationship of money backed by gold when he rebuked the Bretton-Woods agreement in 1971. This was the historical end of the gold standard world wide. In its place the IMF, International Monetary Fund, which had been in existence since the end of WW II become the central source of international monetary policy along with central banks and their ability to print money to influence markets.

FDR, Harold Ickeys, John Maynard Keynes et al and the New Deal in reality slowed the recovery from the Great Depression. World War II helped to set the stage for our countries ultimate recovery and economic dominance post war.



John

 

[EddieS'04]

The new dollar..





[Broken External Image]:

 

[Richard L]

In the 1970's, President Richard Nixon took the US dollar off the Gold standard and converted it to "Currency". That allows the governement to print more money whenever they feel they need more. At that time the value of the US dollar dropped and has been gradually sliding downward ever since.



Back in the 1930's our US dollars were "Silver Certificates" and in theory you could demand $1.00 worth of silver for every dollar. Later the governement passed a law that citizens could not own silver or gold bullon (except for jewelry), so you could no longer redeam your dollors for silver. Now you can own silver or gold, but the US Dollar is only backed by the solvency of the US Governement...which now appears to be on shaky ground.



It's funny, because the more I hear about the proposed bailout of Wall Street, the more I am inclined to say..Let them fail Isn't that the American way? If You gamble big money on Wall Street or even in Las Vegas, and you loose, does the government bail you out..I'm sure they won't. So why should we bail out the fat cats on Wall Steet who have been living the good life for years and now their stupidity has comb back to bite them in the ass.



I remember in the early 1980's when home mortgage rate were 15%-18%, and we survivied. People just bought fewer homes and cars other other itmes. We can survive this as well.



The only people I see crying that we need the bail out because the world will end unless they governement bails them out are the Fat cats on Wall Street who created this mess.



The only regulations that the US government should have had in place is that no sincel company or small group of companies can have such massive control over the economy of the United States. We are talking about 4-5 banking institutions that have gon under, and that causes caos throughout the world markets??? The main regulation that we need is a regulation the restricts the size of some companies so that if one or a dozen of them go bust, the world does not stop turning.



I fear we have been running on the ragged edge for many years and nobody cared.



...Rich

 

[Rodger Tellefson]

We need to roll back to a gold or silver standard so our money is worth the paper it is printed on.

 

[TrainTrac]

The only people I see crying that we need the bail out because the world will end unless they governement bails them out are the Fat cats on Wall Street who created this mess.

Also, the other major group that is calling for the bailout are the Washington politicians (many of whom benefitted enormously from the troubled financial institutions). And it's merely a coincidence that we're a little over 30 days away from an election, and now this has elevated to such a crisis that Washington feels compelled to do something.

 

[TomT]

Why do we need money when we have credit cards?

 

[Thomas Rogers]

RichardL says:

So why should we bail out the fat cats on Wall Steet who have been living the good life for years and now their stupidity has comb back to bite them in the ass.

You and many others may be looking at it wrong.



The bailout isn't for the fat-cats (I say jail them), it is for the companies affected and the system as a whole.



If the large institutions go under, then the availability of credit will be greatly, greatly reduced. Then, many of those looking for home mortgages, or car loans, etc, will be denied; interest rates for loans and credit will skyrocket; companies that rely on credit loans to make payroll will go under; unemployment will skyrocket; only the "rich" will be able to buy anything over a few thousand to 10s of thousands of dollars and we will slump further into a recession...if not a full-blown depression.



TJR

 

[OLE442]

It's backed by the printing presses of the U.S. Treasury Department....



And that FDIC insurance...how do we cover the FDIC for all the covered deposits if we go into a deep recession or depression.....turn on the printing presses. Imagine what that would do to inflation and the value of the dollar.



Odd system we have here IMO......living on borrowed time!



Gary G:wacko: