Eli5. What stops a 1000 dollar check made out to cash from being used as a 1000 dollar bill.

Question

A bit confusing but what I mean by this is say, a guy writes a 1000 dollar check (made out to cash)to buy a quad. The guy receiving the check, instead of cashing it out, uses the original check to then go buy his own quad and so on.

In: Economics

Answer 1

Because checks are not legal tender. They are an IOU to be deposited from one account to another, and are therefore mere debit checks, hence the name.

You have to use legal tender provided by the Treasury as cash.