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The majority of American citizens do not know what backs the U.S. Dollar, and a recent study shows there are a lot more surprises were that comes from.
A recent study carried out by Genesis Mining revealed some interesting details that would shock you too, except of course you already knew the answers. The study was conducted by the digital currency firm to gauge the level of knowledge US Citizens have about the Dollar, the world’s current ‘reserve currency.’
The U.S. Dollar was backed by gold until 1971, a fact that has seemed to only make it into the knowledge-trivia of most people half-baked. According to the study, a significant number of people echoed the belief that the United States Dollar was still backed by gold. A development that had ceased to exist more than forty years ago.
Before 1971, the U.S. Dollar had been backed by a gold reserve like all major currencies in the world until Richard Nixon scrapped the gold standard. After the Second World War, the U.S. Dollars became the most dominant currency and subsequently the ‘reserve currency’ of the world. And its ‘backing’ by the gold reserve had to be removed to accommodate the dollar’s explosive growth.
The U.S. Dollars have since become fiat money backed by the U.S. government itself: a fact not many U.S. citizens know.
The results from the study found that 29 percent of U.S. citizens believe that the country’s major currency is backed by gold, while another 7% suggested it was backed by ‘Nothing’. 4% responded oil, while 5% thought it was backed by bonds instead. Only 30 per cent gave the right answer as the U.S. government, while a sizeable 23% said they were not sure.
Strategic Education the Key to Financial Literacy
The results might not do U.S. educational system proud, and surely reveals areas where people could do with more orientation. The study which also posed questions on Bitcoin and the notion of banks maintaining 100 percent of customer’s deposits revealed the sad reality that not many are keen on financial knowledge in the country.
Marco Streng, CEO of Genesis Group, suggested Americans are “blissfully ignorant” about their financial system, because they have fewer reasons to worry, unlike other countries.
“I believe it’s because for most Americans, overall the U.S. dollar works fine in their day to day lives,” he said. “Unlike countries such as Argentina or Venezuela, Americans don’t have to really be worried about dramatic value fluctuations or strict capital controls. They are too busy living their lives to really take the time to think deeply about what money is, what it means, and how it will evolve in the future.”
The study which also explored the possibility of digital cash such as Bitcoin completely replacing U.S. Dollars as a means of exchange had interesting results. A whopping 76 percent of the respondents answered ‘No’ to the possibility and only 13 percent sanctioned the move in support of digital currency.
When quizzed about the strangeness of the result, Streng said it was understandable.
“It will take time for people to become comfortable with it, just like it took people time to be comfortable paying with a credit card online”, added he.