How do countries end up with worthless currency? Like countries who’s dollar bills lie on the ground or are burned for warmth because it has no purchase power anymore

Question

How do countries end up with worthless currency? Like countries who’s dollar bills lie on the ground or are burned for warmth because it has no purchase power anymore

In: 174

Answer 1

It is primarily due to printing too much of said currency. Since fiat currency has no intrinsic value, the only things that make it worth anything are recognition and scarcity. If it is no longer scarce, people realize that there is so much floating around that it is effectively worthless and stop using it.