How To Guide For: A Look At Whether Or Not Money Has Any Value

Dollar bills are nothing more than pieces of paper with no value, referred to as "Federal Reserve Notes" (FRN). The only thing that gives the FRN any value today is the reassuring text on the left hand portion of the note which states: "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE". Fiat money is money that doesn't have any inherent value. Fiat money is money whose value is called into being rather than inherent. It's called into being in the U.S. by the federal government, which is why the phrase "backed by the full faith and credit of the government" means what it says and no more: the money may have no intrinsic value, but you can trust using it because of its federal backing. Money is a good with a limited supply and there is a demand for it because people want it. Money is used to purchase goods and services. Goods and services are what ultimately matter in the economy. People sell their labor (work) to acquire money in the present to purchase goods and services in the future. As long as people believe in the future value of money the system will work. If people lose faith in the money supply and believe that money will be worth less in the future economic activity can grind to a halt. This is one of the main reasons the U.S. Federal Reserve acts diligently to keep inflation within bounds. To learn more about whether or not money has value click on the pictures below to read the articles.

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