Despite my greatest efforts, I could not find any information about what standard the U.S. is using at this time. Apparently, we used to be on a gold standard. What about now? Do we even have a standard?

closed as off-topic by Tyler Durden, jwenting, Comintern, Kobunite, o0'. Oct 18 '14 at 17:42

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    Define "monetary standard". – Tyler Durden Oct 13 '14 at 14:59
  • Care to define "value"? Marx has a sustained definition. I'm not aware of any other definition that's sustained in that way. (Kudos to the marginalists who decided to elide the problem of value and research their own issues btw.) – Samuel Russell Oct 13 '14 at 21:23
  • @Chantola What do you mean by "value"? You see the problem here? You are operating on a set of mistaken assumptions about money. Money is just whatever a person will take. – Tyler Durden Oct 13 '14 at 21:26
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    @Chantola When you say "pay" for an item, what do you mean? Pay dollars? So, you are saying the "value" of a dollar is how many dollars someone will pay for a dollar? Also, how is a market price a "standard"? – Tyler Durden Oct 13 '14 at 22:21
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    Not a history question at all – user5001 Oct 18 '14 at 15:59

The American dollar is now Fiat Money, unbacked by any physical asset

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    Except the Fiat in my driveway? :) – CGCampbell Oct 13 '14 at 14:24
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    @CGCampbell: Ah! Is that also "unbacked by any physical asset"? – Pieter Geerkens Oct 13 '14 at 14:33
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    @SamuelRussell: I have considered it from time to time, and am leaning to the premise that the underlying asset to fiat money is possibly the ability to pay one's taxes with it; particularly one's income tax. – Pieter Geerkens Oct 13 '14 at 22:18
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    Without wishing to expand a discussion, you might enjoy Dave Graeber's Debt about the role of "states" (repressive class apparatus) in forcing monetary relations in the long duration. – Samuel Russell Oct 14 '14 at 0:07
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    @SamuelRussell: I undoubtedly would - remind me again in ten years or so once I have retired. – Pieter Geerkens Oct 14 '14 at 0:10

The United States abandoned the gold standard on 15 August 1971. Since then it has been using fiat money, which is not backed by any commodity. It derives its value solely from government authority.

This is sometimes also known as a "managed currency standard".

  • It's a stretch to say the dollar "derives its value solely from government authority". That's the foundation for sure, but its value floats freely on international currency markets. – Brian Z Oct 14 '14 at 7:12
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    @BrianZ Not really, just a difference in perspective. You're talking about the dollar's precise monetary worth (in terms of other currencies); I meant value as in the property of being valuable/desirable in the first place. – Semaphore Oct 14 '14 at 7:28
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    @BrianZ and the US government can and does directly influence that by buying up dollars on the market, or by adding more dollars to the market. – jwenting Oct 14 '14 at 8:23
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    @CsBalazsHungary Okay, but none of that has anything to do with my answer. The point is that fiat money has value solely because a government has declared it legal tender. Central banks (which are still government institutions) are irrelevant to that. – Semaphore Oct 17 '14 at 11:54
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    @Semaphore The gold standard never had very much to do with "giving money value" in the simplistic sense you define. The dollar was legal tender long before the gold standard was removed, and that's first and foremost what made it desirable to most users who accepted it. Everyday users of the dollar never thought very much about trading paper in to the government for gold, except when they were making a populist political point. The primary function of the gold standard was historically very much about regulating what you are calling the monetary worth of the currency. – Brian Z Oct 18 '14 at 14:20

I decided to answer it even if briefly it is already answered by Semaphore and Pieter Geerkens

The money itself not backed by any physical assets, to understand the current situation, the existing two answers contain the "Fiat money" definition, which is one big part of the story.

The complete story is way bigger than it can be told in this single answer, but I will try to collect all vital, and useful information since I was interested in it for few years now.

First of all, an official source: Modern Money Mechanics from Federal Reserve central bank (mostly privately owned bank), which tells us how money is created out of nothing (actually from some demand of money supply), which means unlike previous money system backed by gold or silver assets (or anything limiting factor) the money supply can be expanded theoretically to infinity (see Hyperinflation), but in reality people lose faith in currency by that time and start bartering.

I would recommend lectures from documentaries like: Money Masters, or Chris Martenson's and Albert Bartlett's lectures available on youtube (the scope of theirs are broader than just money system). Also might be useful Mike Maloney's "Hidden Secrets Of Money", which contains a good part of monetary history.

I wouldn't recommend Zeitgeist movie even if it contains valuable informations, it is sort of manipulative and you might get drifted far from the information which you are looking for.

For summary: the standard of USD technically the faith of the people (not just US citizens, but foreigners too), which is losing rapidly in the past 10 years, for ex China started agreeing not using USD for international trades so far with 8 currencies (most recently EUR), and also there are serious debates on how to trade oil without using USD.

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    +1 Because the "summary" makes a very good point: that the monetary standard of the US is essentially public faith. However the rest of the post is rather problematic in all sorts of ways, and reads more like a discussion on fiat money than an answer to the question. – Semaphore Oct 17 '14 at 12:01
  • @Semaphore I would recommend the first source for reading primarly since the others are somewhat opinion based, but all of them help to see clearly in the question. I thought on linking them to the answer but since this monetary related part is pretty much factual, I decided to mention them, it might be easier to understand than a dry book. – CsBalazsHungary Oct 17 '14 at 13:25

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