[Jimbee (OP)]

I was shocked to learn in HS that money basically has no value. Our teacher, Mrs. L, told us that it isn't backed up with anything at all. Up until 1971, 5% of U.S. money was backed up with gold. Now its backed with nothing. But then she asked us. If someone gave you a hundred dollars, what would you do? Burn it or spend it? So it obviously has some value.

A couple of things. There's not enough gold to go around, since population has expanded. If we relied on gold, we'd all starve. Also, I was thinking. What really gives gold it's value? There's very little of it. And it's recognized as the medium of exchange. Is that what gives money its value?

[paul cotter]

Confidence.

[alancalverd]

The principle behind money is that it flows in the opposite direction from work. You do something for me, so I give you a token that allows you to get someone else to do something for you. It expands the basic concept of barter or truck by substituting a nonperishable token with a legal status.

Tokens were historically issued by the authority of a monarch or emperor, preferably nontarnishable, distinguishable,  and difficult to copy, with severe penalties for defacing or copying them.  So far so good.

My favorite example of the development and democratisation of money is the Caroline Islands credit rock. These are (or were) discs made from a rock peculiar to each island. They were exchanged for goods traded between islands, then placed by the roadside near a pub. So they couldn't be forged, but only earned by international trade. Having earned your rock, you told everyone in the pub, so everyone who mattered  knew how much you were worth - until you traded with someone on your own island, and you both told everyone that Joe now owned your rock (or part of it). About 3000 years earlier than Bitcoin, and much less prone to scams (if you falsely claimed ownership, the lads in the pub would kill you).

The whole financial system went tits-up when folk pretended that betting hypothetical money on future trade was "work" (except in the Caroline Islands, where there was no hypothetical money, but you could still wager your rock on a football match).

[Origin]

Confidence.

I agree, I would have said 'faith' but it amounts to the same thing.  That is why the whole debt limit fiasco in the US is so dangerous.  If the US actually defaulted on it's loans the faith in the US dollar would be shaken and it's value would drop.

[Petrochemicals]

There has only been one ounce of gold mined per person on the face of the earth, with whatever has been lost and is tied up in stately collections, that is just a 10mm^3 piece each.

[Zer0]

Trust.

[Bored chemist]

There has only been one ounce of gold mined per person on the face of the earth, with whatever has been lost and is tied up in stately collections, that is just a 10mm^3 piece each.

An ounce each.
That's about 30 grams per cc
The density is about 20 so that's about 1.5 cc per person.
1 cc is 10 *10 * 10 =1000 mm^3
So, if PC is correct then about 99.9% of the gold is " is tied up in stately collections".

Time for a revolution?

Or maybe PC meant 1 cm^3 but got his units wrong.

This is why his sig says "For reasons of repetitive antagonism, this user is currently not responding to messages from;
BoredChemist"