The Gold Standard
The following is a transcript of "Money Girl's Quick and Dirty Tips for a Richer Life," a podcast from QuickAndDirtyTips.com. The audio program is available via RSS feed here and at TheStreet.com's podcast home page.
Hello and welcome to Money Girl's Quick and Dirty Tips for a Richer Life. Today's topic: The gold standard. In last week's episode, I explained that the U.S. dollar, like most currencies throughout the world today, is a fiat currency, meaning that it's backed by faith, rather than something physical of value. But this hasn't always been the case. There was a time when the U.S. dollar was backed by something more tangible than faith, and that something was gold. After last week's episode, a listener named Pam S. emailed me with this question: "Why isn't the U.S. dollar still backed by gold and why did FDR recall all gold coins?"A Brief History of the Gold Standard
To get to an answer to this question, let's take a quick look at the history of the gold standard. In 1900, the United States and most of Europe adopted a monetary system based on gold. The Gold Standard Act of 1900 made paper dollars convertible to 1.5 grams of gold. A troy ounce of gold (which is one-twelfth of a pound) was a little over $20.(1) In practice, most people used paper dollars because of their convenience, and didn't often redeem them for gold. If you take a close look at a U.S. dollar bill today, you'll see the words "Federal Reserve Note" printed on it. You'll also see the words "This note is legal tender for all debts public and private."- Loading Comments...
- Loading Comments...
Featured Photo Galleries
| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,023.42 | 1,069.30 | 2,112.44 | 35.03 |
Oil *
76.05
|
|
UP
17.46
|
UP
2.67
|
UP
7.12
|
DOWN
0.30
|
10 Yr
3.50%
SPDR Gold
107.43
|
|
+0.17%
|
+0.25%
|
+0.34%
|
-0.85%
|
Data delayed 20 minutes |














