Throughout history, most currency (including the US dollar) was linked to valuable commodities, and the amount of it in circulation depended on a government?s gold or silver reserves. But after the US abolished this system in 1971, the dollar became what is known as fiat money, which means it is not linked to any external resource but instead relies solely on government policy to decide how much currency to print.
http://ed.ted.com/lessons/what-gives...-doug-levinson