In the early 1970s President Nixon took the American dollar off the Gold Standard. In place of the gold standard, we have money that floats on the world currency markets, where its exchange value is determined. This is fiat money.
The word fiat means, “let it happen” in the Italian langue. A government can create fiat money simply by decreeing that the money is legal tender for all debts, public and private as written on our Federal Reserve notes. (Paper money)