Thursday, April 3, 2014

Son of "Why Money has Value"

Last month I posted on why paper money, like the U.S. dollar, has value.

The basic idea is that even though our fiat currency is not backed by gold or silver, we need it to stay out of prison. If we earn anything, we owe taxes, and taxes have to be paid in dollars. So, dollars are a "get-out-of-jail-free" card, as in the game of Monopoly.

I have written an expanded version of this piece for the PBS NewsHour, at Paul Solman's Making Sen$e page. They have just published it today. It goes into a bit more depth.