Before the Federal Reserve in 1930, The Currency was backed by Gold that the Banks had in their Vaults

 The original currencies were issued by private banks, in fact if you go back to the beginning, the first currency was issued by a goldsmith. Somebody took their gold to a goldsmith and he gave him a warehouse receipt for that gold. Now, the person who owned a warehouse receipt from a reputable goldsmith instead of going back and taking his gold, he might be able to take that receipt and exchange it with with somebody else who had goods and services that he desired. The other person might accept it because they recognize the receipt, they know its a reputable mint, they know there`s gold there and so that warehouse receipt can circulate as currency. That`s what banks did. Before the Federal Reserve in 1930, private banks all around the United States issued their own note currency. The currency was backed by gold that the banks had in their vaults.


Peter Schiff is a well-known commentator appearing regularly on CNBC, TechTicker and FoxNews. He is often referred to as "Doctor Doom" because of his bearish outlook on the economy and the U.S. Dollar in particular. Peter was one of the first from within the professional investment field to call the housing market a bubble. Peter has written a book called "Crash Proof" and a follow-on called "The Little Book of Bull Moves in Bear Markets". He is the President of EuroPacific Capital, which is a brokerage specializing in finding dividend-yielding, value-based foreign stocks.

Peter Schiff