Gold standard question?

Question

obviously money is not back backed up by gold... But someone told me that for every $9.00 of gold the federal reserve prints $1.00 of money or maybe it was the other way... I don't think the person is correct. If someone has any idea about this plese elaborate... thank you!

Answer 1

If that were the case, it would be nice. It's the other way around, the government would more than likely print $9.99 for every one dollar of gold...it's similar to "Fractional Reserve Banking". The value of the US currency today has nothing to do with gold, theoretically. The basic value of the dollar is based on the full faith and credit of the US government and it's taxing power.

Answer 2

No, that would not be correct.  The U.S. has been off the gold standard for a while.

The law does stipulate that money created by the Fed is collateralized. i.e backed by something. For the most part that is U.S. T-Bills.

Take a look at the Federal Reserve Balance Sheet under the section "Federal Reserve Notes and Collateral" http://www.federalreserve.gov/releases/h...