does it mean government owes you that much?
2006-12-21 05:00:07 · 4 answers · asked by Anonymous in Social Science ➔ Economics
A dollar bill is cash money and it is also a banknote in today's language. The Federal Reserve which is essentially a consortium of banks issues the dollars in exchange for various types of debt instruments. A dollar or any paper currency is simply an accepted medium of exchange that you can freely trade for any thing you need. Legally, the dollar is backed by the full faith and confidence of the USA. The dollar is considered a fiat currency which means it is simply paper money without any backing other than the assurances of the government. Most currencies of the world are fiat currencies. The USA, prior to the early 1970's used to back their paper money with silver and gold. France and some other countries started to demand gold for their dollars and the USA decided it would no longer back dollars with precious metals. Today, the American dollar is considered a reserve currency for the world meaning that it has wide acceptance as a method of payment for goods and services.So yes, the government owes you that much, but it can only pay in dollars.
2006-12-21 07:05:58 · answer #1 · answered by Anonymous · 0⤊ 0⤋
OK, here goes...
Originally, bank notes were created so that you didn't have to carry bars of gold and silver around. The notes were backed, at that time, by the gold and silver held by the government.
Because the notes were backed by government funds, they were accepted for all debts.
Today, the notes are not backed by gold as they once were. They are now simply an accepted form of payment thaht has no real value other than that given to it by the people who use it. Americans still accept that a dollar is worth a dollar.
2006-12-21 05:06:14 · answer #2 · answered by Steve H 5 · 0⤊ 0⤋
Cash is backed up by valuable resources. For example: gold
2006-12-21 05:02:37 · answer #3 · answered by Jasmine 2 · 0⤊ 0⤋
The government does not owe you money, and currency is NOT backed by any commodities, Steve H is right. Currency is a tangible object that represents money and serves as a convenient medium of exchange and store of value -- that's what it is.
Currency is only "backed" by the demand for currency. Like anything else, the value of currency is governed by supply and demand. A lot of folks have trouble understanding this, but people always need a medium of exchange and store of value, so there is significant real demand for currency. In times and places where the government fails to provide such a medium, banks or other private entities step up to fulfill the demand. Since there is undeniable demand, the currency will retain its value as long as the supply is limited. Governments work to limit that supply by using using central banks and of course outlawing counterfeit money.
This fact applies to all things of value. Gold does not have any inherent value either. It only is assigned value because people have a demand for it and it is scarce. If there were no people, gold would have no value. (Value, money, and wealth emerge from human society. Those things do not exist in the absence of human society.)
2006-12-21 05:50:18 · answer #4 · answered by KevinStud99 6 · 0⤊ 0⤋
id say buy cheap stuff then sell it for more on e bay
2016-03-13 09:21:41 · answer #5 · answered by Anonymous · 0⤊ 0⤋