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Currency (slrpnk.net)
submitted 9 months ago by to c/lemmyshitpost@lemmy.world
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[–] 32 points 9 months ago (3 children)

While a big mac has intrinsic value, the value of the coin is based on trusting McD honouring the agreement. Will they still accept the coins 10 years from now when they have forgotten they were issued? Will they be sued out of existence after their meat substitute mushroom burger left in the sun for too long comes alive an eats 9 customers and and a minivan?

The value of the dollar is based on trusting the US central bank and/or governmemt to be responsible enough.

While you should not blindly trust either McD or the government, the latter has a longer track record, even though they seem like they are going to eat a metaphorical minivan soon.

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  • [–] 3 points 9 months ago

    Also, the gold standard was based on trust too. You trusted that the government would honour your request to exchange dollars for gold. There was nothing magical about being on the gold standard.

    Money is just IOUs created by the government. The government uses them to pay for goods and services it wants. If the government wants someone to guard a building, they pay in IOUs. Then, every year, the government taxes everybody in the country and demands that they return a certain number of government IOUs to the country. It's this obligation to pay taxes that gives their IOUs their value.

    The person who was paid to guard a building is left holding a pile of IOUs. Fundamentally, they're worthless. But, there are other people in the country who have to pay taxes and aren't doing jobs for the government. So, the guy with the IOUs goes to the farmer and says "I know you're going to need to pay taxes and don't have any IOUs, I'll trade you some of my IOUs for some of your vegetables". After that exchange the farmer has enough IOUs to pay the government at tax time, and the guard still has enough to pay his own taxes.

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