In another sense, because they are a legal tender, Federal Reserve notes are backed by all goods and services in the economy. People accept the U.S. dollar today in exchange for much less than they used to. Since 1933, the U.S. dollar has lost 92 percent of its domestic purchasing power. Even at its moderate 1994 inflation rate of 2.7 percent, the dollar will lose another half of its purchasing power by 2022. In international markets, the dollar has, since 1969, depreciated 65 percent against the Deutsche Mark, 74 percent against the Swiss franc, and 76 percent against the yen.
If there is one section of the Constitution that is almost universally ignored, it is the Article I, Section 10, Clause 1 mandate that our money be backed by gold or silver. Constitutionalists have agitated over the money issue since we lost our gold to government in 1933. However, the public has ignored the constitutionalists since, after all, we can still buy whatever we want with paper money or electronic bank credits, right? So what is the problem?