Sunday School: What is Money?

by wisdomhunt

Money is anything that someone else is willing to exchange for a good or service. It is easier to trade “money” for something than to find two people willing to barter, such as a fisherman willing to trade a fish for an oil change from a mechanic.

In other words, it facilitates trade.

So why do we use pieces of paper with “Federal Reserve Note” and “One Dollar” printed on them as money (or more likely, digits in a computer somewhere)?

You could say that those pieces of paper have value because they are backed by the “full faith and credit of the United States government”, but why does the fisherman or mechanic really care about that? He just wants to eat or get his oil changed.

So the real reason money is money is because people are willing to exchange them for other things, it is as simple as that. And in the United States of America, we can trust our government to responsibly create paper to facilitate this trade.