HS teacher says money can be exchanged for gold - good reference?

[djinwa]

My friend's younger brother in HS had a teacher say money can be exchanged for gold. Kind of sounds like he thinks it is actually backed by gold. Do you have a favorite reference on line he could use to educate his teacher?

Thanks.

 

[dvictr]

yes you can exchange your money for gold...



you have $1000 dollars.. ill trade you for an 1 OZ of gold

 

[Man from La Mancha]

...................Buy........ Sell
1 oz Maple 907.90 ...956.45
1 oz Eagle 907.90....961.00
1 oz Bar ....907.90 ...922.90

 

[Eponym_mi]

You can buy gold with dollars...as long as someone is willing to accept your paper money. That is the real problem with paper money. If the gov't fails (bankrupt, war, whatever), and you are holding paper money, you have nothing. Whereas if our money were gold or silver as the Constitution requires, you would have lost nothing.

 

[Corydoras]

http://en.wikipedia.org/wiki/Gold_certificate

The gold certificate was used from 1882 to 1933 in the United States as a form of paper currency. Each certificate gave its holder title to its corresponding amount of gold coin. Therefore, this type of paper currency was intended to represent actual gold coinage. In 1933 the practice of redeeming these notes for gold coins was ended by the U.S. government and until 1964 it was actually illegal to possess these notes (in 1964 these restrictions were lifted, primarily to allow collectors to own examples legally, however the issue technically converted to standard 'legal tender' with no connection to gold).
Gold certificates were issued in the pre-modern era of U.S. paper money before 1928. When U.S. paper money was modernized (made smaller, as we know it today, with fewer variations or "types") in 1928, gold certificates ceased to be issued.
When the U.S. was taken off the gold standard in 1933, gold certificates were withdrawn from circulation. As noted above, it was illegal to own them.

 

[AceNZ]

I heard Ron Paul say once that some members of Congress still think that the currency is backed by something.

Keep in mind the important difference here. Sure, you can "exchange" your money for gold, in the same way that you can exchange it for food -- that's called buying something. But the currency is no longer backed by gold. Being backed by gold means, by definition, that gold has a fixed price: a certain amount of gold is always convertible to a fixed number of dollars. Before FDR's dollar devaluation in 1933, it was $20 for one ounce -- hence the $20 gold piece.

With this in mind, you can prove that the dollar is not backed by gold simply by observing the fact that the the price of gold is changing -- up to $920/oz or so today.