To me it’d seem that the only reason paper money is worth something is because enough people believe it is. And if that’s the case and more can be printed. There’s no rarity really either. I’d love to hear some explanations. Thanks.
In: Economics
Paper money is backed by the state’s ability to tax and enforce compliance on its people, and the state’s monopoly on violence that allows it to crush counterfeiters.
The state says “this is what you must pay taxes with, and this is how much taxes you must pay” – and if you do not agree, you find out about the violence part first hand. Starts with judicial violence, and escalates as much as it needs to submit you.
By making money the means of payment, and enforcing it, it gives it the backing that makes it functionally real.
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