In the past a country's currency was backed with precious metals. Today all country"s print money at will with nothing more than empty promises backing it up.
This is part of the reason I thought Ron Paul was unbelievable - he wanted to go back to adding the gold standard as being a part of the US currency. I couldn't believe it when I found our about that. So unfortunate that his ideas were rejected: http://www.huffingtonpost.com/2012/01/18/ron-paul-gold-standard_n_121265