Archive

Why does money have value?

  • FatHobbit
    I get that we can trade it for things and that makes it easier than trading things, but why exactly does money have value? Why is 1 euro worth $1.40? How the hell is that determined?
  • sleeper
    The short answer is the market determines the price of currency. The long answer, you'll have to ask someone who works in the FX market because I have no clue how they determine the exact value of each currency relative to any other.

    Mostly I just want BoatShoes to come in here and tell us money is only electrons on a computer and the Fed can make the value of the dollar anything it wants without any consequences.
  • queencitybuckeye
    sleeper;1618298 wrote:The short answer is the market determines the price of currency. The long answer, you'll have to ask someone who works in the FX market because I have no clue how they determine the exact value of each currency relative to any other.

    Mostly I just want BoatShoes to come in here and tell us money is only electrons on a computer and the Fed can make the value of the dollar anything it wants without any consequences.
    Me too, I'd like the two who regularly hijack threads for multiple pages to show the size of their economics dicks to take over. Odd that those so knowledgeable about these theories come off as "big hat - no cattle" types IRL.

    The short answer, OP is that Sleeper is correct. Money has value because collectively, we agree that it does.
  • gut
    sleeper;1618298 wrote:...you'll have to ask someone who works in the FX market because I have no clue how they determine the exact value of each currency relative to any other.
    Differences in interest rates, to rather over-simplify.
  • jmog
    Decades ago money (at least in the US) had value because of the gold standard. We literally only printed enough bills for the value of the gold the country had in vaults.

    Now, like said above, it has value because we all agree it has value.
  • HitsRus
    Mostly I just want BoatShoes to come in here and tell us money is only electrons on a computer and the Fed can make the value of the dollar anything it wants without any consequences.
    ...quoted for truth!
  • Manhattan Buckeye
    As others have said, it is simply a contract. Physically it is a piece of paper, but the value is in the government backing it up.
  • believer
    Manhattan Buckeye;1618742 wrote:As others have said, it is simply a contract. Physically it is a piece of paper, but the value is in the government backing it up.
    That's the scary part.
  • BoatShoes
    FatHobbit;1618133 wrote:I get that we can trade it for things and that makes it easier than trading things, but why exactly does money have value? Why is 1 euro worth $1.40? How the hell is that determined?
    Supply and Demand for money. Money is unique because the supply of money is not determined by the market because central banks/the government have a monopoly over its supply.
  • BoatShoes
    sleeper;1618298 wrote:
    Mostly I just want BoatShoes to come in here and tell us money is only electrons on a computer and the Fed can make the value of the dollar anything it wants without any consequences.
    You basically said the same thing yourself. The only difference is that you failed to point out that the Central Bank controls the supply of money and not the market. Hope this helps.
  • BoatShoes
    queencitybuckeye;1618325 wrote:Me too, I'd like the two who regularly hijack threads for multiple pages to show the size of their economics dicks to take over. Odd that those so knowledgeable about these theories come off as "big hat - no cattle" types IRL.

    The short answer, OP is that Sleeper is correct. Money has value because collectively, we agree that it does.
    Sigh. Some of us enjoy debating in an online forum set aside for debating. That is only a dick measuring contest to the perpetually insecure who add nothing but insults to the discussion. And, you keep saying that phrase "big hat - no cattle". Takes one to know one I guess?
  • BoatShoes
    jmog;1618572 wrote:Decades ago money (at least in the US) had value because of the gold standard. We literally only printed enough bills for the value of the gold the country had in vaults.

    Now, like said above, it has value because we all agree it has value.
    There is a specific reason why everyone agrees that the government's money has a base minimum notional value....and that is because it is the only thing that the sovereign will accept to eliminate tax liabilities. Boatshoes IOU's are worthless unless I can get a greater fool to take them whereas Federal Reserve IOU's always have value because it's the only thing Uncle Sam will accept to pay your taxes.
  • BoatShoes
    HitsRus;1618684 wrote:...quoted for truth!
    I've never said that misuse of the Federal Government's currency monopoly cannot have bad consequences. I simply have pointed out that they are not the bad consequences that deficit scolds think they are...i.e. that the U.s. government can go bust lol....and that we have much greater policy space than the current debate imagines.
  • BoatShoes
    believer;1618756 wrote:That's the scary part.
    I'd rather own IOU's from an institution with 5,000 nuclear weapons and the greatest Navy in the history of the world than claims on worthless pieces of shiny metal.
  • queencitybuckeye
    BoatShoes;1618920 wrote:Sigh. Some of us enjoy debating in an online forum set aside for debating. That is only a dick measuring contest to the perpetually insecure who add nothing but insults to the discussion. And, you keep saying that phrase "big hat - no cattle". Takes one to know one I guess?
    No, the productive can easily spot the unproductive. They spew theory from books and websites as opposed to putting any knowledge to practical use.
  • BoatShoes
    queencitybuckeye;1618940 wrote:No, the productive can easily spot the unproductive. They spew theory from books and websites as opposed to putting any knowledge to practical use.
    LOL.
  • QuakerOats
    Money has no real value; it is a medium of exchange facilitating trade, and represents a potential claim (which does have value) on goods, property interests, or the productive labor/services of .......................you guessed it, the productive.
  • gut
    Well, to put it simply, money has value because people agree it does. That's true of any fiat currency, and also true of gold.
  • ptown_trojans_1
    FatHobbit;1618133 wrote:I get that we can trade it for things and that makes it easier than trading things, but why exactly does money have value? Why is 1 euro worth $1.40? How the hell is that determined?
    Take a Macro Econ course....
  • gut
    ptown_trojans_1;1619383 wrote:Take a Macro Econ course....
    careful now....education apparently qualifies as dick-waving around here.

    I honestly forget, but I thought money/FX was like FIN301. :)
  • ptown_trojans_1
    gut;1619395 wrote:careful now....education apparently qualifies as dick-waving around here.

    I honestly forget, but I thought money/FX was like FIN301. :)
    Exchange rates, floating vs. set, etc all Macro 101.
  • queencitybuckeye
    gut;1619395 wrote:careful now....education apparently qualifies as dick-waving around here.
    When it's used for no purpose than a failed attempt at trying to prove you're the smartest kid in the room, that's exactly what it is.
  • gut
    queencitybuckeye;1619471 wrote:When it's used for no purpose than a failed attempt at trying to prove you're the smartest kid in the room, that's exactly what it is.
    LMAO...it's a discussion forum, you can participate in the thread or not read at all. You're quite bent out-of-shape about it.

    If you're going to debate something like economics, theories and fundamentals are going to tend to come up. IMO pointing out trivial banality or outright ignorance falls well short of dick-waving. And P-towns comment about taking a macro course is a great example, by the way - explaining cross-rates is not a particularly easy thing to do if someone doesn't first understand some basic concepts.

    And in case you haven't noticed, I quit debating the lost-causes here quite some time ago.
  • BGFalcons82
    BoatShoes;1618926 wrote:I'd rather own IOU's from an institution with 5,000 nuclear weapons and the greatest Navy in the history of the world than claims on worthless pieces of shiny metal.
    As long as the IOU's are the worlds's currency, it's all good.
  • FatHobbit
    ptown_trojans_1;1619383 wrote:Take a Macro Econ course....
    This is a great suggestion. I honestly don't know the difference between micro, macro, etc... or even where to start. If I didn't have a schedule that would easily permit taking classes is there a decent book to read? Or should I just look for whatever book the local college is using as their text?