What gives paper money its actual value?

Money is just tinted paper printed with different numbers on it. So what gives the ol' greenbacks its value? The bills used to be tied to the gold standard but now, it's up to The Fed to control how many bills there are. So why can't they just decide to print out ridiculous amounts of bill to make everyone rich?

Ted-Ed explains how the total number of currency in circulation can't increase too much faster than the total value in goods and services in the economy because each bill will only buy a smaller amount of things they could before (inflation). But the opposite of inflation is bad too! And the video below explains why.

Image Credit: Svetlana Lukienko/Shutterstock


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