Irredeemable Paper Money

Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order it here)

Money that a government has made legal tender in payment of debts but that is not redeemable in standard money, i.e., gold or silver, the metals commonly used as a basis for currency in all commercial countries.

Irredeemable paper money usually becomes the circulating money and tends to drive metallic money out of circulation or places it at a premium through the operation of GRESHAM'S LAW.  It is usually subject to wide fluctuations in value and causes similar fluctuations, though in inverse ratio, in commodity prices.  In the United States, paper and metallic money in circulation are irredeemable in gold; the country has been on an international gold bullion standard of the restricted type since the GOLD RESERVE ACT OF 1934.

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