Before the gold standard was dropped, it was relatively easy to understand where money got its value.
Money represented a certain proportion of gold in a country’s National Reserve. The money could be cashed in for gold, a very physical and tangible item. That all makes sense.
But we don’t use that anymore. So isn’t the money just paper? I don’t see how this system makes sense anymore.
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The thing that gives *anything* value is people’s willingness to give you stuff in exchange for it.
Gold isn’t a particularly useful material, but it looks pretty and we all *like* it. If you have a gold bar, people will trip over themselves to give you stuff in return for it. That gives it value. The fact that you could trade it for food, or for shelter, or for a new car, or for whatever you want or need. If you couldn’t do that, if people didn’t care about gold, then it would be worthless. The value of gold doesn’t come from the material being useful, it comes from everyone *agreeing* it has value.
So what gives money its value?
The same thing. We all *like* it. Everyone will give you stuff in exchange for it. If you give someone money there’s no end to what they’ll give you in return. A loaf of bread, a subscription to Netflix, a plane ticket to another continent. The value of money comes from everyone agreeing it has value.
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