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RE: Why does a bill (money) really have value when they are all printed on the same paper?

in #money6 years ago

The value of fiat money is a shared illusion. It is a story, but by believing that story, it becomes real (at least partially).

The government can try to print more and more money, but that does never work in the long run. The reason is twofold. First when people start to doubt that story, the entire currency starts to crumble. The government has to keep the trust in the currency high and printing huge amounts destroys that trusts. They have to invent stories, such as printing money to keep up with the economic growth, or fighting deflation..... just so the people keep their full faith.

The second problem is that the markets are actually smarter than the politicians. The markets simply readjust all the prices. The government printing money does not create wealth, it is just stealing wealth from the savers.

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Well said, it's a shared illusion