Money is an emotional thing. Do I believe that this coin / bit of paper / number on a website is something that I can exchange for goods and services? If not enough people believe that, that currency will collapse.
Mind you, not using money is inefficient at scale. Sending the bag of potatoes that I’ve grown in my garden this month to my internet provider for continued shitposting privileges only goes so far.
Money is an emotional thing. Do I believe that this coin / bit of paper / number on a website is something that I can exchange for goods and services? If not enough people believe that, that currency will collapse.
That’s not true at all. You know most of the reason why your currency works? It’s not based on tinker bell. It’s based upon the fact that the government collects taxes from you in it. It’s also based upon the fact that other countries will accept it as repayment of debt or face military consequences.
Now, stock prices are mostly irrational – though some companies do actually produce valuable goods and services and own infrastructure – I’ll grant you that. But belief has very little to do with USD being more than green-tinted paper.
Isn’t that a ‘necessary but not sufficient’ condition though? I’m thinking principally of the struggles in Zimbabwe here.
Are you asking if collecting taxes in the currency is the “necessary but not sufficient” condition for a currency to have value? Sure.
The second thing I wrote about (military consequences) is another thing altogether. Obviously, things are slightly more complicated in modern economies and with global capitalism so they aren’t the only factors that matter, but they’re important. In addition, prior to Trump part two, there was also the dominance over global capitalism using soft power, but I think we’ve begun the process of “uncentering” ourselves in that system.
Expectation of stock value, sure, but also inherently valuable in that the services or products they provide are things that people value. For instance, a utility company that owns electrical plants and produces electricity and distributes it provides an inherently valuable service. Who pays for that is a separate concern, as is the stock price, but the service itself is valuable.
