Why does money have value ? it's just a paper ? ?

Question

Why does money have value ? it's just a paper ? ?

Answer 1

First, money is NOT printed on paper. It's printed on cotton. But it's hard to explain the value of money without going into a economics lesson.

The money of value differs daily, but it's really about supply and demand. The money doesn't really have value, but what it represents. Back in the day, they would carry around bills, so not to carry gold. Money represented the value of gold they had, that they traded in banks. But it became the currency which is backed up by the government, as a national currency.

It's A  LOT to explain. I'll link you somewhere.  

Answer 2

Because it represents the value that you /do/ have, which is hopefully locked away in a bank or something, which in turn represents the sum of money that your country (US right?) actually has.

Answer 3

yeah, a paper that get you things. haha

Answer 4

It didn't start out that way, "just paper."

In the past money was in the form of coins, generally composed of precious metals such as gold and silver.  The value of the coins was roughly based on the value of the metals they contained, because you could always melt the coins down and use the metal for other purposes.

The reason it still has value, without being able to be exchanged for gold, is that money is a good with a limited supply and there is a demand for it because people want it. The reason I want money is because I know other people want money, so I can use my money to others to get goods and services from them in return. They can then use that money to purchase goods and services that they want. Goods and services are what ultimately matter in the economy, and money is a way that allows people to give up goods and services which are less desirable to them, and get ones that are more so. People sell their labor (work) to acquire money now to purchase goods and services in the future. If I believe that money will have a value in the future, I will work towards acquiring some.

Cool question, by the way.

Also, I'd like to note that I got the information for this answer from economics.about.com, where someone asked the same question as you.

Answer 5

umm... i don't know but here is a link to someone that might answer your question.

http://economics.about.com/cs/neoclassic...

Answer 6

We have to pay with something. What would you prefer? Gold coins.....

Answer 7

Its a way to trade. Hhowcome i can buy stuff just by entering some numbers from my credit card.  

Answer 8

stupid question.

but still answering it.

because... its like the only thing we will never run out of

Answer 9

Money is a store of value and a means of exchange. Before the introduction of money we had a system of barter where a person exchanged a chicken for a bag of flour. This system was soon found to be insufficient as if you only had flour and wanted a pig, but the person who had the pigs had no need for flour there was a problem. Hence cowry shells, stones, gold and finally money came into existence. This makes the buying and selling of goods and services easier to transact.