Prior to 1971, the US dollar was backed by gold. Today, the dollar is backed by 2 things: the government’s ability to generate revenues (via debt or taxes), and its authority to compel economic participants to transact in dollars.
Gold bugs often debate the scope and impact of gold price manipulation. Some of these accusations are absolutely true, while others enter the realm of conspiracy.
To understand the history of US monetary system, we must grasp the role of its central protagonist: gold.
The long-term risks of quantitative easing, including eroding the credibility of the US dollar, are closely linked to gold's performance.
History is clear: when the money supply increases, the gold price follows. The more dollars are printed, the more can be stuffed into the earth’s limited supply of gold.