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Is Money Made of Paper?

Discussion in 'Economics and Financials' started by 2socks, Apr 25, 2013.

  1. 2socks

    2socks Rebuilding Since 1973

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    Sounds Crazy right? This question was asked of me this morning by my newly aged 9 yr old. The conversation went something like this:

    Daddy, is money made of paper?

    Yes buddy, why?

    Well I don't understand.

    What do you mean?

    Well.......is there gold inside the money?

    No buddy......as I laugh and chuckle to my self

    If money is just paper - Then how is the money worth anything Daddy?

    Not sure how to answer your question Cole, why don't you ask your teacher today when we get to school?

    Ok - Daddy I will.

    Her response ought to be interesting............


    I know a good bit about how the monetary system works. How would you answer my 9 yr olds question?

    For the record this truely happened this morning and Cole had a very puzzled look on his face when I told him their was no gold inside the money.
     
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  2. Jimmy James

    Jimmy James Ron Swanson

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    I'd tell him our money used to be gold and then silver and one day it just didn't make sense any more to do things that way so we have replaced it with a system where the paper money stands for something and that the something it stands for is very complicated. I'd then start talking about Fed policy until his eyes glaze over (which is usually a +/- 15 seconds thing for most people).
     
  3. MikeHoncho

    MikeHoncho -=| Censored |=- Club Member

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  4. 2socks

    2socks Rebuilding Since 1973

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    Update:

    Cole wants to know if he can make his own money. He told me he is going to ask Santa for a printer with green ink.........lol
     
  5. Boik14

    Boik14 Admin Club Member Retired Administrator

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    Get it for Cole and get a pair of handcuffs for him because if he prints his own money thats what hes going to need. Juvey at 9 years old :lol:
     
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  6. 2socks

    2socks Rebuilding Since 1973

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    I was really surprised by the question. Especially at such a young age. Of course I have him as the next star of the Miami Dolphins so better to teach him about money now then later. The cool part is I get to teach him that .50 of every dollar goes to daddy as a management fee.:wink2: I also get to let him know that when Ireland low balls him its.......punch, Knife hand, snap kick. In that order, followed by a doubling of what was offered then a call to Grandma.
     
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  7. Daben

    Daben Season Ticket Holder Club Member

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    Money isn't made out of paper, its made out of linen or cotton strands, and therefore does not grow on trees in any sense.

    The reason we have pounds sterling as currency in the UK was because originally the notes represented the corresponding number of pounds of sterling silver which were then held by the Bank of England. That is if I remembered that correctly.
     
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  8. Justright

    Justright Banned

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    True, but cotton comes from a plant. And since trees are plants, in a sense it does grow. ;)
     
  9. Fin D

    Fin D Sigh Club Member

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    Tell him its because of the Tooth Fairy.

    She collects teeth and exchanges them for currency. Every dollar in the US is worth exactly one tooth. We use the paper money so people don't have to walk around toothless. Its why the words "dollar" and "molar" are close.
     
  10. 2socks

    2socks Rebuilding Since 1973

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    I know. American Money is 75% cotton and 25% linen and made in Massachusetts. But a 9 yr old doesn't know that. The thing I was illustrating here is the mind of a 9 yr old is not corrupted yet. So if the common sense of a 9 yr old begs the question, what does that say about us as adults? This thread was to illicit hopefully intellectual conversation. It really does beg many different topics of possible discussion. For example, if money really is not worth anything, then why not just push the computer button and drop off a few zero's. There, budget, deficit problem solved. I am just using that as an example. Or if we did do that what would actually happen? I would love to learn more from those that are more knowledgeable, especially the lawyers, since they seem to have all the money;)
     
  11. 2socks

    2socks Rebuilding Since 1973

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    That's hilarious. I have a 7 yr old - TY. He actually had a wiggly/jiggly recently. He said to me a couple weeks ago, " I wish the tooth Fairy would leave me 10 dollars, instead of 5 dollars because I can't get anything with only 5 dollars". I'm telling ya Fin D these kids amaze me everyday. I was actually trying to figure out how much more it was gonna cost between the two kids, now that I been highjacked to $10 a tooth. Man I only got .50 or a dollar if I was lucky. It still is a joy to see them wake up and be all excited..........would not change it for the world
     
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  12. MikeHoncho

    MikeHoncho -=| Censored |=- Club Member

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  13. Eshlemon

    Eshlemon Well-Known Member

    Lol.

    Perhaps a way to explain something he can relate to at that age, its wrong to copy someone else's work. If he literally wants to make his own money, OK. But nobody has to take the Colecoin...which traders are speculating would be worth 10 Bitcoins.
     
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  14. gunn34

    gunn34 I miss Don & Dan

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    I hope he's not the NEXT star of the Dolphins. I would like him to be a star, but if he's only 9 now...... I hope we have many between that point.
     
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  15. 2socks

    2socks Rebuilding Since 1973

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    Just for the record, I think the question my son asked, was missed.

    He asked if money had gold in it. Then asked if it didn't then how does it have value. It is a interesting perspective from a 9 yr old.

    So why do we allow our money to have value? What keeps the system in place? Why not just do something different?
     
  16. Eshlemon

    Eshlemon Well-Known Member

    Yes, and those 9 year old perspectives are some of the most interesting. Perhaps starting with a little history. Salary is from an ancient form of giving salt for payment for work. We allow paper money to have value so when I go to work, I don't just have a bag of salt to bring to take home and to try and fill all our families needs. What keeps it in place is if I'm being paid in money, I have to be able to pay for things in money. I'm not working for paper that has no value and can't be used for exchange just as I won't be sold anything for paper that has no value. Do something different? Sure, getting paid in salt instead, but then that's a lot salt to carry around and barter for goods, Cole do you want to carry around a big bag of salt or a wallet.
     
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  17. finyank13

    finyank13 Reality Check

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    yeah right....inflation fool....

    it is like a fin now.....
     
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  18. ToddPhin

    ToddPhin RIP Phinsational Luxury Box Club Member

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    "Go ask your whore of a mom. She thinks it's made from trees." would be my answer.
     
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  19. jdang307

    jdang307 Season Ticket Holder Club Member

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    My 7th grade teacher went into this. He asked everyone in the class. What gives money it's value.

    After about an hour it came down to: Faith.
     

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