What is the united states currency based on?
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The Curious Bag
ANSWERS: 1
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The United States Constitution (Section 10) requires that U.S. money be made of gold or silver. The U.S. Coinage Act of 1792 provided for the creation of the U.S. Mint and defined by statute that one U.S. dollar was worth a specific weight (371.25 grains) of silver. In 1793, the U.S. Mint commenced minting gold and silver coins.
History
In times of extreme debt, when the United States didn't have enough gold in reserve to back all the money it needed, it took the dollar off the commodity standard (that is, gold or silver).
Definition
A currency that is not tied to any commodity is called a "fiat" currency. A government simply declares that its currency is legal tender. If the currency is refused, the debt is not legally required to be repaid in any other money.
Standard
In 1971, President Richard Nixon ended the gold standard for U.S. currency, making it a fiat currency; and so it is today.
Outcome
There are no longer any countries in the world that have commodity-based currency.
Strength
The strength of any fiat currency is based on faith in the government of issuance.
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