How can money have value if we don’t use the gold standard anymore?

Question

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.

In: 0

Answer 1

The federal government will only accept USD to pay you taxes. You can’t pay in crypto or silver or pokemon cards. This create an inherent demand that set the dollar as a valuable thing to have. The rest is just what we agree the dollar is worth.