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<p>[QUOTE=&quot;GDJMSP, post: 6083, member: 112&quot;]I&#039;m only going to attempt to answer this in a simplified way if EVERYBODY promises not to start a big bar-room brawl about it&nbsp; <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie8" alt=":D" unselectable="on" unselectable="on" /> </p><p><br /></p><p>Try to picture what was going on in the US in 1933 - banks were failing &amp; closing on a daily basis. The little guys were losing their life savings. We were in the midst of the worst depression the country had ever experienced. Virtual collapse of the monetary system was imminent. And to make matters worse - some governments and very wealthy people outside the USA were attempting to manipulate the gold market and cause the price to rise significantly. And it was rising.</p><p><br /></p><p>Now at the time banks had their reserves in the form of gold as was required. But banks were going broke because everyone was withdrawing their money. This made them have to draw on their reserves and they could not afford to buy more gold at higher prices to replace those reserves. The US Govt. itself was slowing going broke for the same reasons. And because everybody knew this - gold was being hoarded. And when gold is hoarded the price rises even faster. This was only making things worse.</p><p><br /></p><p>So the only thing they ( the govt. ) could do was to take the US off the gold standard and declare gold illegal to own. In a nutshell - it was so serious that if this had not been done - the USA may not have survived.</p><p><br /></p><p>But there is another reason also and back then it was just coming into play. There is only so much gold &amp; silver in the world. And when a country&#039;s currency is backed by gold &amp; silver they have to have a dollars worth of the metals for every paper dollar they print. Prior to 1933 this was never a problem. </p><p><br /></p><p>But as the population of the world began to grow the need for more and more currency to be printed was growing just as fast. And sooner or later it had to outpace the production of gold &amp; silver. There just wasn&#039;t enough of it anymore. In 1933, it was enough for the time being to take the country off the gold standard. And every country in the world soon followed because they were having the same problems we were. And so silver replaced gold as the monetary standard.</p><p><br /></p><p>But then by the early 1960&#039;s governements of the world began to realize there wasn&#039;t enough silver anymore either. And to remain on the silver standard would have pushed the price of silver to exorbitant levels. Now silver isn&#039;t just used for money - it has many commercial uses as well. And for the price to escalate that much and that fast would have had disasterous results in other areas of the world&#039;s economy. So it was decided that the silver standard had to go as well.</p><p><br /></p><p>Today - there is no where near enough gold &amp; silver on the entire planet to back the currency of every nation in the world. Enough of it just doesn&#039;t exist. Now some people will say that is so much hogwash - but it isn&#039;t. All you need is a calculator and a few facts and figures and you can figure it out yourself.</p><p><br /></p><p>And when it comes right down to it - it doesn&#039;t even matter. Currency does not have to be backed by anything except the people&#039;s willingness to accept it in order for it to work. We could use bright pink rocks as money if the guy at the grocercy store and the gas station was willing to accept them as payment. That&#039;s all that&#039;s required - people just have to be willing to accept whatever form it takes. That makes it money.[/QUOTE]</p><p><br /></p>

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