[VIDEO] Simply put before 1971 the American dollar was based upon its convertability into gold. Shapiro goes through the history of the gold standard in the U.S. and he starts in 1834 when American goes on the gold standard. Of course what changes is that monetary policy changes.
By the Great Depression the gov't nationalizes gold and prohibits convertability. America becomes the world's reserve currency. As explained by Shapiro other national currency instead of attaching their own currencies to gold instead attaches their value to that of the American $ which until 1971 was still on the gold standard.
In 1971, the American dollar essentially becomes a fiat currency per the direction of President Richard Nixon. He would term this action to protect the value of the American dollar. And that means the value of our currency will be based upon the full faith and credit of the U.S. gov't.
I've met a few people over the years who think the $ should go back on the gold standard.
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