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1/8/2013 5:53:52 PM
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I have a question about money.

I'm not an economist, so excuse my ignorance. If the US's currency isn't backed by anything, and so much of it is just 1's and 0's on a computer...what makes it worth anything?
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  • [quote]what makes it worth anything?[/quote]Woman want $ Men want Woman Men need $ to get Woman Thus, money is the most important material object in the world.
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  • [quote][b]Posted by:[/b] MadMax888 [quote][b]Posted by:[/b] A Good Troll Faith. ... I'm serious.[/quote]That's what makes me uncomfortable. If we reverted back to only using cash currency, no electronic transactions and such, would we even have the $16 Trillion and change that the country is in the red for?[/quote] Physically present? Nope. There is only a little over $1 trillion in actual physical printed paper money in existence. If everyone went to their bank at once and tried to withdraw it, there are not enough dollars in circulation to fund that. As a side note, there is not enough short term cash deposits, physical or otherwise, to pay back the debt either. [url=http://www.federalreserve.gov/releases/h6/current/]M2 money supply, which is basically all the short-term cash in existence[/url], only stands at over $10 trillion. [Edited on 01.08.2013 10:00 AM PST]
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  • Money is worth something because we all agree that it should be. I'm 100% serious. I'm no economist either, but a currency's value, I think, is actually derived by how much currency is in circulation and how much the country buys and sells. If you flood the market with cash, the total currency value stays the same, but each bill or coin is technically worth a little less. But it is all one big "agreement." Yes, the metals in some coins have value, but the coinage and paper money is "agreed" to have a certain buying power to it.
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  • [quote][b]Posted by:[/b] A Good Troll Faith. ... I'm serious.[/quote]Its quite funny how terrifying this realization is. Its like looking out the airplane windows and seeing the plane is powered by a flock of pigeons tied to the wings...
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  • [quote][b]Posted by:[/b] MadMax888 I'm not an economist, so excuse my ignorance. If the US's currency isn't backed by anything, and so much of it is just 1's and 0's on a computer...what makes it worth anything?[/quote]Originally it was the trust that government could pay it back in gold. Now its more along the lines that so many people use it/ trust the US government won't go under. So essentially its trust in government(Hard to believe).
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  • [quote][b]Posted by:[/b] A Good Troll Faith. ... I'm serious.[/quote]That's what makes me uncomfortable. If we reverted back to only using cash currency, no electronic transactions and such, would we even have the $16 Trillion and change that the country is in the red for?
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  • [quote][b]Posted by:[/b] A Good Troll Faith. ... I'm serious.[/quote] Sad, but true.
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  • [url=http://economics.about.com/cs/neoclassical/a/value_of_money.htm]This should explain why currency is worth something, hope it answered your question[/url]
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  • Faith. ... I'm serious.
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