ibox/material/edit: It isn’t backed by anything, because to be backed, an instrument must promise payment in something – the backing.
Many people have a hard time believing that loans from their local bank branch are money created from nothing, but in fact that is exactly what they are. The bank collects interest and principal back on something that cost nothing to produce. This is the awesome money power bestowed by the 1913 Congress on the Federal Reserve system, and because of the inherent tendencies of such a power, the debt load at all levels of the U.S. economy has continually grown over the 20th century, with few exceptions.
by Jason Pratt
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