[dennisw]

A fiat currency is a leveraged currency. Our currency is more leveraged than it ever has been....is a bubble currency. All modern currencies are leveraged so we're not alone. I like gold. I like honest money and would be happy with a currency backed by even 10% gold. Today our currency is backed not by gold but by the full faith and credit of the USG. 
IOW the US dollar exists and is accepted on belief, positive psychology and faith.

Someday the dance will end for our currency just like it has for the NASDAQ and will end for our current real estate mania.

Full Faith and Credit
... What will happen to the "full faith and credit of the United States government"
backing the US dollar then? How about the stock markets, bond markets et al? ...
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[Lazamataz]

Today our currency is backed not by gold but by the full faith and credit of the USG.

Not a bad bet, in my estimation. At least in our lifetimes.

[arthurus]

There are 2 ways to run an honest gold standard that will iron out the bumps and dips in economic "cycles". One way is for the only economic rule of the Fed to be that the price of gold must not vary. Continuous corrections are signaled byincreasing and decreasing demand for liquidity which is satisfied by open market bond operations to stabilize gold.

Thje other way is a circulating gold coinage with the free coinage of gold. You take 5 ounces of gold to the treasury and the treasury gives you 5 ounces of gold coins. These coins could circulate beside the fiat currency and would be an instant visible-to-everyman check on inflation. Either or both would be of immense value to the economy as they would vastly reduce the costs of dealing with fluctuating and less than perfectly predictible values of currencies.

[Illbay]

... What will happen to the "full faith and credit of the United States government" backing the US dollar then? How about the stock markets, bond markets et al? ...

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