Coins and paper are worthless.
Coins and paper represent something.
Say you have a gold bar. In real life, that gold bar is very heavy. You can't be walking around with tons of gold bars.
So instead, you print a piece of paper or you issue a coin.
Coins used to be worth something, if they were actually made of gold. This would be like walking around with pieces of gold instead of the actual gold
But then later people begin to issue silver coins and now I don't even think most coins even have much silver in them. I think they have nickle or
copper in the middle and are coated with silver or something.
Metal coins are at least metal and can be melted down and used for something.
Paper money is the worst.
You have a piece of paper that is a bank note. It represents part of a gold bar that is stored away some place. You and I will never see this gold
bar, but it is supposed to exist. Our paper money works because we believe that some place, some where, there is a gold bar that this piece of paper
represents a fraction of.
So a dollar bill represents a small part of a gold bar some place.
But the thing is, there is a limited amount of gold.
If you print more money, it does not make more gold. It only makes more paper.
So if you print more money, each one is worth less and less, because you only have created more paper and not more gold.
Well most of the time this system works, because really, you and I will never see the gold bar that this piece of paper is said to represent. As long
as we continue to accept the paper money and live like it is actually worth something, then it will work for most of us.
But we do owe a dept to other countries and governments. When we do business with them, they are going to want to know our currency is actually backed
Sometimes a country will buy our dept from us, and I'm not sure how this works, but it gets us out of trouble for a while. But I don't know how we
can pay this dept off, especially if we print more money.
What we need to do is find more gold to back our money. Either that, or we need to find another resource to back our money with.
So say we use silver or oil or something we have a lot of, we can store this some place, and print a new currency. This new currency could be backed
by something that is actually valuable. So if we stored a lot of silver or diamonds or oil or something some place, then we could issue money based on
that I guess.
Maybe one day we will find a new resource to use.
Anyway, money is only valuable if backed by something.
If it isn't, then in reality it is just paper and metal, and only worth the paper or metal. It would have no value really. I guess we could continue
to function if we pretend it has value. That might work in limited circumstances.
If all the citizens of the United States continued to function as if their money had value, I guess it would work, because we would give it value in
our own minds.
I mean, some native tribes traded with feathers, beads, shells, and other things that were pretty. These items had some value in that they were used
in tribal dress, hard to acquire, and pretty. Some beads might signify status, or a certain feather might mean something to them.
When outsiders saw these tribes liked pretty beads and things and were willing to trade, like a horse or some food for that, they would mass produce a
lot of stuff, like glass beads and stuff to trade with them.
To the visitor, the horses, blankets, hides, meat and things had value. It was easy to make some cheap glass beads or find shells or something to use
to trade with. To those more advanced, these items were junk and they were getting a good deal by trading basically junk for good resources.
Right now gold has always had value, and probably always will. It is just another metal really, and if we suddenly found a huge amount of it, so large
that it was very plentiful and easy to get, then it too would be worthless and we'd have to find something else to use.
Anyway, we have to have a resource that is worth something to use for money, we can't just make more of it, it doesn't really work that way. It
might work for a short time. But sooner or later people will realize it is isn't really worth anything. We might use it amongst ourselves, like the
natives used beads and feathers amongst themselves. That might work for some people who are all in agreement about the value. But for money to really
work, everyone in the world has to agree it is worth something.