I understand that point of view, but I just don't think that taxation is the main reason fiat currency has value.moda0306 wrote:Hey man I agree in a lot of ways.edsanville wrote:I'm not entirely sure, but I'd say it's a combination of legal tender laws, convenience, scarcity, and the self-perpetuating fact that it's the standard that people are currently exchanging amongst themselves...moda0306 wrote: What do you think gives it value? I mean other than our massively productive economy around it.
Legal tender laws help.
This element of scarcity helps.
But until I heard Warren Mosler described his business card hold up (holding the people in the room he's in hostage unless they can supply him with one of his own business cards, gives those cards value), I really felt lost as to what actually clinched it. I think the real clincher is taxes. It's the only one that makes a damn bit of any motivational value sense.
We could all look at each other and have a big "a ha" moment with our currency and it collapses in a day... unless we all believe the government is going to put us in jail for not supplying them with some by the end of the year. It's the negative value they put on NOT having it that helps give POSITIVE value on having it.
To clarify what I mean: I don't believe taxation affects currency value, outside of how it affects the money supply.
If the United States stopped collecting taxes tomorrow and paid for everything by purchasing its own debt, I believe the US dollar would still have value and still be traded in the marketplace.
Do you agree with that statement, or do you believe that the dollar would be worthless in such a scenario?