What gives paper money its actual value?

Illustration for article titled What gives paper money its actual value?

Money is just tinted paper printed with different numbers on it. So what gives the ol' greenbacks its value? The bills used to be tied to the gold standard but now, it's up to The Fed to control how many bills there are. So why can't they just decide to print out ridiculous amounts of bill to make everyone rich?

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Ted-Ed explains how the total number of currency in circulation can't increase too much faster than the total value in goods and services in the economy because each bill will only buy a smaller amount of things they could before (inflation). But the opposite of inflation is bad too! And the video below explains why.

Image Credit: Svetlana Lukienko/Shutterstock


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DISCUSSION

bardwso
bardwso

Money is just tinted paper printed with different numbers on it.

Can also be made of plastic as in the case of Australian bank notes beginning 1988.

Funny story: prior to introduction they did many tests such as putting money through washing machines etc.

Only thing did not do was pass it from person to person, Turned out in the original version human sweet actually wiped away the details.