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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Gold bars don’t pay interest. It’s value is arbitrary. But what about the industrial output if a nation? What about a stable, growing nation? What if you could own a piece of that nation and that nation’s growth, getting more of the nation as it grows?
Government Bonds are essentially this. If we take the dollar off of gold and back it by a promise of growth- a guarantee that you’ll get your money back along with some a percentage of that nations growth, then we have something that could be more valuable than gold- especially if new gold reserves are found and mined.
This all works well if the nation continues to grow. If it doesn’t, or finally hits a wall, well… here we are.
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