Why Do We Value Worthless Paper As Money?

I’ve got a hundred dollar bill in my pocket and with the possibility of a zombie attack imminent I want to trade it in for real gold. Don’t worry about whether this makes sense or not. I want my gold. I’ve never had any and it seems like the right time. The important question to ask is if a 100 dollar bill will get me the equivalent value in gold. Is it 1 for 1? Not anymore. Based off this infographic we now fall under a ‘Fiat currency’ and there amount of paper bills circulating exceed real gold 9 to 1. At face value that makes no sense. But that’s because we’re still thinking of bartering as trading something for its equal value. That is no longer how our economies work. Even when we did barter we used the perceived value of an item. It’s similar now, but instead of gold it’s the perceived strength of the economy. For more info check out this infographic.

buddy-loans-what-is-money-smaller

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Comments

  1. What is it about infographics that I absolutely love. You could diagram Barney the Purple Dinosaur via infographic and I’d get excited.

    That said, I love the bottom line: “the value of anything is subjective.” Agreed.

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