Silver Standard

We started out using silver coins. They worked well as money. Everyone likes silver, and it’s durable. It’s conductive (the most conductive of metals), pretty (jewelry), and is overall considered a valuable thing. So it made sense to use it as currency. Eventually, we switched things up. Paper was brought over from China to Europe, and then Gutenburg made the printing press. Bam...hello, paper currency.

Okay, it’s not that simple, but you catch our drift. Even after we switched our currencies over to paper and other metals, many fiat (government-backed) currencies still “backed” their currencies with silver (and/or gold). A government choosing to peg a unit of their currency to a certain amount of silver is called the “silver standard.”

For instance, if the U.S. dollar was on the silver standard, that would mean you could turn in your U.S. dollars to the U.S. government in exchange for the pegged rate of silver per dollar. "Gimme as many silver bars as $100 USD is worth, plz and thx."

For hundreds of years, many people thought that this (backing worthless paper currency with something legit) was a requirement. The silver standard, the gold standard, or the bimetallic (both gold and silver) standard. Something. Why would people trust holding some worthless paper if the government wasn’t promising it was actually tied to anything valuable?

Well, we can all ask ourselves that today, since the U.S. dollar and many modern-day fiat currencies aren’t backed by silver nor gold. We’ve been with our currencies long enough...or maybe we’re just cocky enough in our little civilization we’ve built for ourselves that we don’t think we need to back currencies with anything real.