What is the real value of Money
You must know that money doesn't exist on its own. It is printed. It is paper and ink. It is not very valuable on its own. It represents a promise of value. It is an accepted medium of exchange. It allows barter without actually owning or holding anything until after the purchase. We agree to use paper money without much value and the result is that when we print more money, each dollar is worth less in the marketplace. Still, the government authorizes the Treasury Department to print more money in order to have more money to spend.
The table below provides details on the printing costs of Federal Reserve notes for each denomination.
| Denomination | Printing Costs |
|---|
| $1 and $2 | 6.2 cents per note |
| $5 | 10.8 cents per note |
| $10 | 10.8 cents per note |
| $20 | 11.2 cents per note |
| $50 | 11.0 cents per note |
| $100 | 14.0 cents per note |
When government spending increases, taxes go up because the income of the US Government is the taxpayer base. if the government increases unemployment payments (like during COVID-19) that money comes from the people who work.
Denomination
of Bill | Life
Expectancy
(Years) |
| $1 | 5.9 |
| $5 | 4.9 |
| $10 | 4.2 |
| $20 | 7.7 |
| $50 | 3.7 |
| $100 | 15 |
So, not only are the notes only worth about 10-15 cents instead of their face value but also when we are paid, every dollar we are paid is only worth about 7 cents. Somewhere in this debacle, there is a huge amount of profit for someone. Where is that 85-90 cents per dollar?
If we only have a specific amount of currency in circulation and every bill needs to be replaced in 5-10 years, then I suppose we could believe that in 7-10 replacement printings, the full value of the bills would be achieved.
However, we don't have a specific amount of currency in circulation.
So, who values money?
The Federal Reserve. of course.
We (regular people) value the Federal Reserve Note because we need it for bartering. It is our only way to know how our savings compare to anyone else's savings.
We use notes so we don't have to have the ocean-going vessel that someone wants for the doors he creates. We also don't need to have the rabbit skins someone wants in exchange for the tables she makes. We also don't need the radishes he needs for the automobile we want to purchase. We just tally the amount of what we make for the value others believe it has multiplied by the number we have made and compare that tally to the number of tables (or anything else) that is currently being tabulated. The result is the amount of money we are worth. We can then leverage that amount of money to make purchases. It is all really the barter system at work.
Still, the only value money has for most people is determined by what we can buy with it.
However, for the Federal Reserve, it means profit. They sell each bill for face value, but the costs are much less [reference the table above].
