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Fiat money is simply any currency which is not backed by something physical, such as a precious metal like gold.
Instead, fiat money’s value is placed primarily in its overall scarcity and the stock which people place in it.
For much of our history, the United States monetary system was based on the gold standard. That meant the value of our money was actually backed by physical gold.
During the Civil War, the U.S. first used fiat money to pay for the staggering expenses associated with the conflict. However, the gold standard resumed by the 1880s. Returns to fiat money in the U.S. occurred again during World Wars I and II.
The U.S. has consistently been using a fiat standard since the early 1970s.
I’m the Coin Editor here at TheFunTimesGuide. My love for coins began when I was 11 years old. I primarily collect and study U.S. coins produced during the 20th century. I’m a member of the American Numismatic Association (ANA) and the Numismatic Literary Guild (NLG) and have won multiple awards from the NLG for my work as a coin journalist. I’m also the editor at the Florida United Numismatists Club (FUN Topics magazine), and author of Images of America: The United States Mint in Philadelphia (a book that explores the colorful history of the Philadelphia Mint). I’ve contributed hundreds of articles for various coin publications including COINage, The Numismatist, Numismatic News, Coin Dealer Newsletter, Coin Values, and CoinWeek. I’ve authored nearly 1,000 articles here at The Fun Times Guide to Coins (many of them with over 50K shares), and I welcome your coin questions in the comments below!