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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What do you do for things that don’t have a defined value?
Now we have people doing work that saves you having to do work. They make machines to let work get done faster. Fancy math is done to figure out the easiest way to do things, so you don’t have to try everything to find what works best. Processes get improved to make the most out of what work gets done.
How do you define the value of someone who saves work? If it’s tied to a physical equivalent, that work would be considered ‘worthless’.
The currencies we use have value because it sets a standard, allowing easier interactions. You don’t need to haggle to try and get a better price. Value is fairly equal no matter where you go, it’s not tied to what someone wants to trade.
If you’re a farmer and grow only flowers, you would only have flowers or your other possessions to trade. If you needed tools to do more work, a blacksmith isn’t going to have any use for flowers. If you sell your flowers and collect money than can also be used elsewhere, then you’re not limited to just interacting with people who want flowers when you want to trade for something.
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