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Posted by David Sherman on Tuesday, March 10, 2009 at 11:26:02 :
In Reply to: Fiat Currency posted by 48PW on Tuesday, March 10, 2009 at 10:42:13 :
The funny thing is that all money, even gold and silver, are basically based on "faith and credit". There are a lot of elements that are more scarce than gold, and yet are cheaper because they have no use. Gold is money only because people decided it is. It has a long worldwide tradition behind it, but other than that, there's more logical reason for gold to be money than for wampum shells or pictures of dead white men to be money. In early days in the northwest, people used cedar shingles, with specific things written on them, for money. What makes it money is that everybody you want to do business with accepts it as having some standard value. Therefor, "money" really exists only in people's minds.