Our currency has not been pinned to gold for 40 years (when the Bretton Woods system collapse), but the Federal Reserve still maintains the holdings.
Before the Bretton Woods system collapsed, the US government was required to allow large entities to exchange their USDs for gold. Now, it isn't required to. But the fact that the Federal Reserve holds the gold, and that it is well known that they would use it to support the value of the USD, helps maintain the value of the USD.
Money is money because people believe it is money.
Right now, you can turn in a $20 for food and booze and whatever. I'll believe that's money. And if people don't have a reason to stop believing, it'll continue to be money.
The whole "money has value because people believe in it" thing isn't exactly correct. Money has value because somewhere along the line, someone accepted US dollars for something valueable to them. If you're hungry, you value food. When you produce food and allow someone to pay you in US dollars, you've injected value in to the US dollar. The dollars you hold are an abstract representation of the value you provided that you can then exchange for something else of value in the future. The US dollar is a means of accounting.
The term "has value" is used loosely when it comes to currency. It's true that the currency itself is valueless outside the context of trade, but most modern economic theory is predicated on the axiom that this is OK.
Think of it in math terms. Arabic numerals are a means of specifying quantity.
* * * * *
How many asterisks are there? There are 5. The numeral 5 describes the quantity. The number 5 is not literally five asterisks. It only describes the quantity. The same is true of modern currency. $3.50 is not literally a gallon of milk, it merely represents the economic quantity of milk. If I agree to sell you milk for dollars, I'm adding value to the dollar.
When viewed in this way, something else becomes clear. One of the basic values of currency is trust, not "intrinsic value" (which is a euphemism for intrinsic utility). When I add value to the dollar by exchaning valuable goods or services for dollars, I trust that everyone will play by the rules. Specifically, I'm trusting that the value of my trade will be preserved over the term that I hold the dollars.
That's actually backwards. Money has value because somewhere DOWN THE LINE someone anticipates turning those dollars into something valuable to them. As such they accept it in the stead of that valuable thing.
Our currency has not been pinned to gold for 40 years (when the Bretton Woods system collapse), but the Federal Reserve still maintains the holdings.
Before the Bretton Woods system collapsed, the US government was required to allow large entities to exchange their USDs for gold. Now, it isn't required to. But the fact that the Federal Reserve holds the gold, and that it is well known that they would use it to support the value of the USD, helps maintain the value of the USD.