Fiat Money Is All About Confidence

We often talk about the intrinsic value of the raw materials that compose coins and bills, but it’s really end-user “confidence” that provides fiat money value. Confidence is a fickle thing. It's there without question one minute and gone the next. When confidence vanishes, regardless of raw material costs, money quickly finds more practical uses.

Burning Marks As Fuel for Wood Burning Stove, Weimar Republic 1923-1924)


Headline: Guess what? Dollar bills are made of cotton

Sure, packs of T-shirts and socks are getting expensive because of skyrocketing cotton prices. Guess what else is made of cotton? The dollar bill in your wallet.

In 2010, the cost of making one note jumped 50% from what it cost the government in 2008.

81Email Print The government produced 6.4 billion new currency notes last year. Each one cost 9.6 cents to produce, including the cost of paper and printing.

In 2008, it only cost 6.4 cents a note, a tiny bit more than it did in 2007, according to the U.S. Bureau of Engraving and Printing.

With the price of raw cotton at a 140-year high, things could get worse.

Source: money.cnn.com