What is the US dollar backed by?
In: 2582
You are required to pay taxes in USD if you pay taxes to the US gov’t. This creates a stable demand for USD. Americans want to be payed in USD so they can pay the taxes to their gov’t which pressures employers to pay in USD. If you are a British company but want to have access to skilled american labor…you have to get USD to give to your employees. The USA being involved in nearly every economy in the world spreads this USD pressure around.
Any Gov’t currencies work because citizens in that gov’t agree to use that as the medium of exchange for value. Then if foreign actors want to access that labor force they have to acquire that currency.
Currency is just an IOU and it’s value is derived based on if you can actually cash it in.
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