what is the american dollar based on?
What is the American dollar based on if you borrow for example 700$ billion dollars while the country is in 9.6 trillion in debt, who in reality borrows us the money?
ive heard many conspiracy theorists saying all sort of bs, and ive done plenty of Research, i mean the dollar has to be strong for some reason otherwise other countries wouldn't be pegged to it eg the pount or euro or even yen.
i would just like to have an unbiased answer to my question thank you
- jareyn2002Lv 61 decade agoFavorite Answer
The American dollar is backed by the faith and credit of the United States of America since we went off the Gold Standard.
The Gold Standard Act of the United States was passed in 1900 (ratified on March 14) and established gold as the only standard for redeeming paper money, stopping bimetallism (which had allowed silver in exchange for gold). It was signed by President William McKinley.
The Great Depression in the 1930s resulted in the abandonment of the gold standard by the United States. President Franklin Roosevelt changed the valuation of gold to $35 per ounce of gold as an inflationary measure, where an increase in the valuation of gold tends to increase price levels in general. Farmers, for example, will get more dollars for their grain, but they will have to pay more for the goods purchased with the inflated grain sale proceeds. The Gold Reserve Act of 1934 also withdrew all gold from circulation, and Congress nullified clauses in public and private contracts that provided for payment in gold. In 1935 the U.S. Supreme Court considered the constitutionality of the ban on gold in the so-called Gold Clause Cases, where the court upheld the statute's negation of gold clauses: Perry v. United States,Nortz v. United States, and Norman v. Baltimore & O.R.R.
- milton bLv 71 decade ago
There is no backing for the dollar, or any other modern currency. The value of money in the modern world is based on the belief that it has value. This may seem strange but consider that your bank account doen't contain any actual money, it is just a number that the bank keeps in a computer file. Trillions of dollars, Euros, Yen etc. exist as nothing more than computer records.
- 4 years ago
Nothing. FDR took the US off the gold standard in the early 1930s (domestically) and Nixon took the dollar off the gold market internationally in 1973, so today the value of the American dollar is simply determined by what it will buy on the world market. That is what is meant by the dollar being "up" or "down" on the world market.
- 1 decade ago
The American dollar is what is called fiat currency and is backed by the full faith and credit of the United States. The currency is essentially a loan from the Federal Reserve, so each dollar comes with a small amount of debt attached. The gold standard is no longer in place and American currency is not backed by gold.
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- Anonymous1 decade ago
It is only based upon the faith in the credit of the US government. When the US goes bankrupt in about 10 years, the value of the dollar will plummet to zero.
- 1 decade ago
the monetary value of a dollar is back up by the gold in the united states treasury. we always have the same relative amount of gold but if the amount of money printed increases, the value of the dollar goes down. when it gets to too low a point, we borrow money with hope of bring the value the dollar high enough to pay it back
- Never More!!Lv 51 decade ago
the value of gold