The United States used a gold standard for most of the late 19th and early 20th century. This meant that a person could exchange U.S. currency–as well as many public and private debts–for gold until President Franklin Delano Roosevelt ended the practice during the Great Depression. Even after that, though, the U.S. dollar was tied to the value of gold until the early 1970s when President Richard Nixon canceled the direct international convertibility of the United States dollar to gold. Currently, the U.S. dollar is fiat currency, meaning that its value is backed by the government that issues it.
Some argue that fiat money is more stable than money backed by a commodity like gold or silver because supply of and demand for currency is controlled by the Federal Reserve which is more able to limit the impact of major economic shocks, such as the financial crisis of 2008-2009. Gold and other commodities, however, are finite and people tend to hoard these commodities during financial crisis, which in turn drives up prices and leads to further instability.
Those who support the gold standard (like a few 2016 presidential candidates) believe that fiat currency is not stable because it is not backed by anything “real”–only the government’s word. Of course this controversy has even more relevance when we think about Bitcoin …
In the end, according to economists, stability is what matters.