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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>Before the gold standard was dropped, it was relatively easy to understand where money got its value.
But where does gold gets its value? Gold has practical usage but it is quite limited. Gold primary is valuable because historically easy to shape and keeps its color and we like its look of it. But today when you can have other material that looks just like gold the primary value is because we think it has value. This is exactly the same as paper money.
The value of money is because we all agree it has value. That makes trading services and goods a lot simpler so it is a good idea for us all to agree on its value. Money is used because a barter system is quite impractical on a large scale so we use money as a token to make it simpler for everyone.
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