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There is No Real Money of Value
Money doesn't have any inherent value. It is simply pieces of paper or numbers in a ledger.
A car has value because it can help you get where you need to go.
Water has a value because it has a use; if you don't drink enough of it you will die.
Unless you enjoy looking at pictures of deceased national heroes, money has no more use than any other piece of paper.
It didn't always work this way.
In the past money was in the form of coins, generally composed of precious metals such as gold and silver.
The value of the coins was roughly based on the value of the metals they contained, because you could always melt the coins down and use the metal for other purposes.
Until a few decades ago paper money in different countries was based on the gold standard or silver standard or some combination of the two.
This meant that you could take some paper money to the government, who would exchange it for some gold or some silver based on an exchange rate set by the government.
The gold standard lasted until 1971 when President Nixon announced that the United States would no longer exchange dollars for gold.
Now the United States is on a system of fiat money, which is not tied to any other commodity.
So these pieces of paper in your pocket are nothing but pieces of paper. .
So why does a five-dollar bill have value and some other pieces of paper do not?
It's simple: Money is a good with a limited supply and there is a demand for it because people want it.
The reason I want money is because I know other people want money, so I can use my money to others to get goods and services from them in return. They can then use that money to purchase goods and services that they want.
Goods and services are what ultimately matter in the economy, and money is a way that allows people to give up goods and services which are less desirable to them, and get ones that are more so.
People sell their labor (work) to acquire money now to purchase goods and services in the future.
If I believe that money will have a value in the future, I will work towards acquiring some.
Our system of money operates on a mutual set of beliefs; so long as enough of us believe in the future value of money the system will work.
What could cause us to lose that belief? It is unlikely that money will be replaced in the near future, because the inefficiencies of a dual coincidence of wants system are well known. If one currency is to be replaced by another, there will be a period in which you can switch your old currency for new currency.
This is what happened in Europe when countries switched over to the Euro. So our currencies are not going to disappear.
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