Why paper money has value

2023-06-07 21:52:21

Wozu is paper money actually good? 100 years ago, during hyperinflation, some answers might have been, “Maybe for heating, or for the kids to play with.” In other words, money was pretty much worthless back then. At least it no longer served its purpose as a means of payment.

Any kind of money is accepted as a means of payment for real goods and services if people assume that they can use the money to buy other goods or services. Money is a promise for future consumption. The question of how to convince others that they can actually exchange money for goods and services has occupied mankind since the introduction of money. One answer is obvious: you use something valuable as money – for example gold.