The official money of the United States is the dollar. It’s equal to 100 cents, or pennies, and is represented by the $ symbol.
The US dollar began with the Coinage Act of 1792. This law established the dollar as the official currency – or type of money – for the United States. It also tied the value of the dollar to gold and silver. We called this the gold standard.
The Gold Standard
The country was on the gold standard for a long time, but during the Great Depression, people got scared that the dollar would lose its value, so they started trading their money in for gold and silver. To stop this from happening, President Franklin Roosevelt signed an executive order that made it illegal to own gold or silver coins, certificates, or bullion. A year later, Congress passed the Gold Reserve Act, which also let the president set the price of an ounce of gold to $35. This lowered the value of the dollar.
Eventually, the dollar was taken off the gold standard and became “fiat money” – that is, money that isn’t backed by anything real.
Number One Currency
With the dollar off the gold standard, its value goes up and down. Over time, it has lost most of its value. A dollar today buys about the same amount of stuff as four cents did 100 years ago! But even after losing most of its value, the dollar is still the top currency in the world. Many countries use it.
Will the dollar stay at the top? Eventually, some other currency might become number one. But for now, the dollar is king.