I need some help but at the same time want to complain and maybe make a sugestion.

My question is, what backs the U.S. dollar? I was always had the understanding that it was backed by gold. However I was told today that it is backed on our good faith.

I have been tring to learn more about the economy and the stock market but I guess I need to start with some backround, namely what makes the American dollar worth more than the fabric it is printed on.

I ask this question because today I was looking at some of the stock market reportings and found that the British pound is almost worth twice the American dollar and the Canadian dollar finaly is worth more than the American dollar, however the price of gold hit a record high today of over $881oz.

HERE IS WHAT I GOT FROM THE INTERNET
"Gold moved to a new high, finishing at $881.70 an ounce in New York. So far in January, the metal is up 5.2% after jumping 32% in 2007. But it was moving lower in electronic trading.


Exchange Rates



British Pound to US Dollar
1.957713
Euro to US Dollar
1.466706
Japanese Yen to US Dollar
0.009107
Canadian Dollar to US Dollar
0.990688"


http://articles.moneycentral.msn.com...09markets.aspx

This makes me confused is if our dollar is backed by gold and the value of it is at record highs then why is the American dollar worth so much less. Or should I ask what is backing those other countries curency's and what makes it so valuable?

If our money is backed on good faith then what is the root cause for us not to be good to our word? Is it war, is it imigration or are we a bunch of liers and I'm just nieve about everything.

If its war then I can only hope for peace soon, I support or troops, if its imigration I can't say put up a wall to keep everyone out because this country was founded on imigrants but I can say quit handing out a free life make them all citizens and make them start paying takes and subject to all the same laws. If we are not good on our word then I say the people we have elected beter start doing what they said and what is good for the country rather than whats good for them or we need to replace them.

I apoligize for going off topic slightly but I needed to rant a bit.

 

Historically, Gold is what brokers and investors buy (in very large quantities) when the market is about to take a dump.

Right now the US green back isn't doing so hot because there are issues with the housing market and jobs - or so I'm lead to believe.

Up here the Canuck buck is about as steady as it comes. On the world market we really don't normally go way up and way down - we only do so against the USD. Right now the Euro and the Pound Sterling are very strong but they have always been so. You need to compare all of these currencies with the Yen and others from Asia - this is what the movers and shakers are doing. I personally have little faith in that currency and think it is very overvalued and it will correct itself here soon. The one to use as a mark for the long haul is the pound.

This is just my observation.

 

It's been a while, but I remember discussing this in school.

The US dollar was originally backed by gold. You could take ratty, faded bills to the treasury and they would give you gold in exchange. Can't remember when, but at some point it was changed that good faith is what backs the dollar. If you take that same ratty, faded bill to the treasury now, you will get a nice crispy brand new one...

Random, huh?

As far as digging deeper into that, you got me there. I would say it is a combination of everything you mentioned. If one of the causes was diminished, the one of the others would make up for it...

 

in 1930??? i believe........we stopped using gold to back the dollar, now its "oil" pretty much, should of just kept it gold........

 

In 1933 President FDR passed Executive Order 6102 which outlawed the personal ownership of gold.

In 1971 the Nixon Administration removed the U.S. Dollar from the gold standard, changing it to a fiat money system, or in layman's terms, "backed by a promise."

The Pound Sterling is so high at the moment because the U.K. raised their interests rates in 2006 due to the escalation of the Eurodollar....and also due to the worldwide devaluing of the U.S. Dollar for a number of reasons....

 

Its called insider trading , back by an endless supply of B.S.
I do not remember all the dates , but I thought that nixon took his orders to take the backing of silver [ the last of real tangible ] , the gold was pulled some time earlier buy an other administration directive .
The ones that are really in charge [ never elected , unless you count Diebold voting machines { but we can not do that , its there private property }] make all those plans behind the curtain .
Short term profits / power .
With out knowing there plans , its hard to imagine that it can go on for long with out collapsing .
Did you hit a sore spot / rant .