Prior to 1971, the United States was on various forms of
a gold standard where the value of the dollar was
backed by gold reserves and paper money could be
redeemed for gold upon demand. Since 1971, the United
States dollar has been a fiat currency backed by the
"full faith and credit” of the government and not backed
by, valued in, or convertible into gold.
Proponents of the gold standard argue it provides long-
term economic stability and growth, prevents inflation,
and would reduce the size of government. They say a
gold standard would restrict the ability of government to
print money at will, run up large deficits, and increase
the national debt. They say the economy has historically
performed best under a gold standard.
Opponents argue a gold standard would create
economic instability, spur periodic economic deflation
and contraction, and hamper government's ability to
stimulate the economy and reduce unemployment during
recessions and financial crises. They say returning to a
gold standard would be extremely difficult given the
scarcity of gold and could severely harm the already
fragile US economy.
Since its founding in 1776, the United States has had a
variety of monetary systems including bimetallic
systems where the dollar was backed by both gold and
silver (1792-1862), a fiat monetary system
(1862-1879), a full gold standard (1879-1933), and a
partial gold standard (1933-1971). From 1971 to
present the United States has been on a fiat monetary
standard. [71 ]
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