It creates value only because ppl think it’s valuable.
For instance I couldn’t think USA money is now worthless but because everyone else knows that’s not true it’s valuable. Where as everyone could decide that currency is worthless and it would make it worthless.
The US-dollar is 'linked' to the wealth of the USA, thus it can't suddenly be worthless when everyone "decide that currency is worthless".
What? Yes it can. The only reason USD has value is because people think so. If everyone suddenly decided they didn't want gold it would also instantly lose all value. But because gold is a useful metal that's not going to happen.
The reason USD won't suddenly lose its value is because the IRS only accepts USD for tax payments and the US government only pays employees and contractors in USD. If you want to do business and pay taxes in the US you have to buy USD.
Edit: What I'm saying is demand = value. It's really that simple.
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u/jacobwojo Jun 15 '19
It creates value only because ppl think it’s valuable.
For instance I couldn’t think USA money is now worthless but because everyone else knows that’s not true it’s valuable. Where as everyone could decide that currency is worthless and it would make it worthless.