The value of fiat money is based largely on public faith in the issuer. Commodity money's value, on the other hand, is based on the material it was manufactured with, such as gold or silver. Fiat 15.1.2 Nongold National Money As the gold standard evolved, substitutes for gold were developed. The motive for substitution was a reduction in the real resources em- in mining gold. Paper money substitutes may be produced with much smaller real resources. The substitutes included fiat currency issued by governments and commercial bank Fiat Currency vs. Representative Money. Representative money is also produced by the government, but unlike fiat money, it's backed by a physical commodity. From there on, the gold standard Gold Standard: Summing Up the Key Differences. The fiat money vs. gold standard debate has been doing the rounds for quite a while. The Buzzle write-up below explains the differences between the two. The price of gold, as denominated in dollars, was steady until the collapse of the Bretton Woods system in the mid-1970s. The Bretton Woods system of monetary management established the rules for commercial relations among the United States, Canada, Western European countries, and Australia among 44 other countries after the 1944 Bretton Woods Agreement. Fiat Currency vs Gold Standard. The gold standard is a monetary system where gold blocks back the currency, i.e. it is directly linked to the value of precious metals. If a country has a gold standard, the government sets a fixed price for one ounce of gold, which determines the value of the other currency. .

fiat money vs gold standard