Quote:
Originally Posted by mud flap
I read something recently that said there had been two or three other occasions in the last 100 years where the amount of US cash in circulation had greatly exceeded the amount (in dollars) of gold held in the US. In these cases, eventually the price of gold was driven up so that the value of the gold matched the value of the paper money.
We are long over due for one of those corrections now and with the tremendous amount of cash that has been printed, gold would have to rise to over $15,000 per ounce for the value of the gold to match the value of all of the cash.
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The USA (or any other country) has not used gold to back all (or even most) of their currency in a very long time.
Currency operates under a system caled
'fiat currency."
In a nutshell, that means our money is
only backed by the stability and economic strength of our country.
Not by reserves of gold.
Nixon even stopped the procedure of other countries asking for gold in exchange for dollars back in 70's. At that time, he felt there was too much gold leaving the USA and basically told them that
"you will just have to trust us."
In fact, although no one can really prove it (because they won't allow an audit).............I'll bet there's not a lot (if any) gold left in Fort Knox these days.
http://www.rapidtrends.com/the-history-of-fiat-money-in-the-usa/
(click above)
.
