For most of American history, silver or gold stood behind the coins and currency notes people used every day. That link stretched back to the Coinage Act of 1792 and survived, in changing forms, until the early 1970s. But in August of 1971, the final formal connection to gold ended.
From that point forward, the United States dollar rested on something less tangible and more continuous: the combination of the productive capacity of the American economy… the government’s power to tax… and the public’s willingness to accept the currency in everyday transactions.
Economists and officials described the dollar as backed by the full faith and credit of the United States. Or, to put it another way, American currency was backed by the future – by the ongoing ability of the nation to produce, to trade and to meet its obligations...
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