Final answer:
The supply of money in the United States was historically 'backed' by commodities like gold or silver, ensuring its value. Today, the dollar's value is supported more abstractly by economic stability and government policies, rather than direct commodity backing.
Step-by-step explanation:
The supply of money in the United States essentially is "backed" (guaranteed) by the government's ability to keep its value relatively stable. Historically, this stability was achieved by commodity-backed currencies, meaning that currency values were supported by physical commodities like gold or silver. At the height of the Bretton Woods System, the US dollar was fixed to gold at a rate of one ounce of gold per 35 US dollars, and other currencies had a fixed parity with both gold and the US dollar. Foreign governments could exchange their US dollars for gold at the fixed rate, which helped create a sense of stability and reliability in international finance.
However, with the floating of currency rates in the early 1970s, the specific backing of currencies by gold was ended. The US dollar's current 'backing' is not in the same commodity sense but is instead based on the strength and stability of the US economy and the government's fiscal and monetary policy measures designed to maintain the currency's value against the forces of supply and demand. The term commodity-backed currencies reminds us of a time when currencies like the dollar were directly exchangeable for a specified amount of gold or silver, as evidenced by the 'Silver Certificate' dollars in circulation until 1957.