Wednesday, April 30, 2008

Dollar Trivia

What is the US Dollar backed by (i.e., what does the government store for each dollar in circulation)?

1. gold
2. silver
3. a combination of gold and silver
4. nothing

Think about this for a few seconds before scrolling down.

If you chose a, b or c, you fall in the 95+% of the population (my somewhat educated guess) that believes this myth. Ask your friends, or forward them this post - they'll probably guess a, b, or c as well. Congressman Ron Paul has noted that even members of Congressional finance committees believed this myth until he disabused them of their false notion. The dollar is not backed by anything. Well, I suppose in some ways it's backed by the will of the federal government and the Federal Reserve to preserve the dollar's value, but as I'll discuss in another post, it's pretty clear that the powers that be are in favor of a depreciating dollar.

That this myth is so widely subscribed to begs the question of "why". Why is it that most Americans don't know this most basic fact about their currency? It used to be backed by precious metals, but we got off the gold standard a long time ago. But there has been virtually zero education of today's public of the dollar's true nature. And, as it turns out, it's not in the interests of almost anyone who matters for Americans to be made aware of this.

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