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<p>[QUOTE=&quot;fatima, post: 1048072, member: 22143&quot;]Not exactly correct.&nbsp; When the country was founded the dollar was officially defined in terms of being equal to a set amount of silver, or gold for higher denomination coins.&nbsp;&nbsp; With few exceptions this definition pretty much stood until 1914 when the Federal Reserve Note was introduced.&nbsp;&nbsp; At that time however a FRN could be exchanged for a gold or silver dollar at face value so it was held at bay. </p><p><br /></p><p>This all changed in 1933 when FDR issued an executive order that required people to turn in their gold dollars, gold certificates to their nearest Federal Reserve bank who would give them back a $20 FRN for each ounce of gold.&nbsp;&nbsp; FDR then took the gold that he got at $20/oz, had the US Treasury produce US gold certificates, and these where then given to the Federal Reserve at the rate of $35/ounce. FDR used this &quot;profit&quot; to fund his programs.&nbsp;&nbsp; This is when the historic break began when the dollar was defined in terms of precious metal.&nbsp; However they still had two problems which would take another few decades to sort out.&nbsp; There were still silver money out there and internationally currencies were still redeemed in gold. </p><p><br /></p><p>So until the late 1960s, people could still take their silver certificate dollars to the bank and demand a set amount of silver.&nbsp; However at this point FRN printing was already out of control and they could no longer allow these conversions.&nbsp; This led to the removal of silver from most coinage in 1965 and a cancellation of the redeemability of silver certificate dollars in 1968.&nbsp;&nbsp; In the days leading up to this cancellation there were long lines of people waiting to exchange their paper silver certificate dollars for the real stuff.&nbsp;&nbsp; </p><p><br /></p><p>The last window to be closed was the gold redeemability by foreign governments that held dollars.&nbsp; France started it as there was a huge trade surplus and started ordering the conversions.&nbsp; There are stories of tons of gold being shipped from Ft. Knox (the same gold taken from the people in the 1930s) to NY which were placed on planes and flown to Europe.&nbsp; It eventually go to the point where governments were sending ships to collect the gold when Nixon closed the window without warning.&nbsp;&nbsp; One of his finance secretaries very famously said (it was directed to France) &quot;It&#039;s our currency, but your problem&quot;.&nbsp;&nbsp; Legally it was the first bankruptcy of the US.&nbsp;&nbsp; This was also the time, 1971, the US Treasury stopped circulating US Bank Note dollars because it created an additional legal paradox which I won&#039;t get into.&nbsp; </p><p><br /></p><p>From 1971 on, the US $ was now completely fiat.&nbsp; It was the first time in close to 200 years of US history and we entered uncharted waters.&nbsp;&nbsp; The end result close to 40 years later is that 98% of current US debt was generated during this period and it is accelerating.&nbsp; &nbsp; Fiat currencies have a fundamental flaw, interest, that mathematically can&#039;t be fixed and thus Central Banks are forced to introduce inflation to cover it.&nbsp;&nbsp; But this is only a bandaid and eventually this bandaid causes a collapse.[/QUOTE]</p><p><br /></p>

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