| How exactly does money that is not backed by anything differ from monopoly money?

Question

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

Answer 1

It isn’t. But most currency is backed by a *promise* that it’s legally exchangeable for goods or services. The value comes from that promise.

But yeah…