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Surely every dollar, physical or not, can be said to be 'backed' by the assets of the issuing institution? Assets that are most likely government or corporate o
by alimw 9y ago
Surely every dollar, physical or not, can be said to be 'backed' by the assets of the issuing institution? Assets that are most likely government or corporate or mortgage debt, implying a stake in real state apparatus, business or property...
- Terr_ 9y agoDollars aren't backed by assets, dollars are backed by debts. Collateral is nice but not required. At its core a dollar-bill is a uniformly-sized, freely-transferable IOU, representing a credit held by the bearer with the US government as the debtor. Even if nobody else wants your rectangle of paper and linen, the US government has to honor it when they do things like ask you to pay taxes. That's the foundation of the dollar being worth something. See also: "Debt, the first 5000 years" by David Graeber
- deleted 9y ago[deleted]