The paper bills in our wallet are not money. And they are not Notes as in “Federal Reserve Note” written on the top of the bill. They are actually just Tokens. Federal Reserve Tokens, if you like, is what should be written on top of the bills. They are not redeemable for anything other than themselves. And they represent only one thing: Your belief in their value. Hopefully, your belief extends to the next person you try to give them to.
The only real use for them is paying your taxes to either the state or federal government. You can be sure, however, that both will stop accepting them as payment even for taxes if you and I stop believing in the paper bills.
Paper money, or fiat, was originally accepted because you could redeem the paper for gold upon request. Read more about fractional reserve banking…
