Is money from USA economy real or pretend?

What a great question. It's both, but you have to decide which way you favor to look at it.

It's real in the sense that EVERYBODY recognizes it. If you take to a foreign country, there are many who would gladly free you of it.

The entire supply of gold in the world is worth about a trillion dollars, Obama is going to spend twice that this year!

Back in 1971, Pres. Nixon realized that the world had created more wealth than could be backed by gold. The gold standard was eliminated and we went to a fiat money system. Each countries money is based off everyone elses! The system works so that the price of everything is relative to the situation of the world economy. Some countries have had trouble keeping tabs on deflating their money by printing too much, I believe it is Argentina that has an interesting history trying to curb inflation with fiat money.

Many would argue that fiat money is pretend, but in reality there exist too much money in the world to back everyone's money. For example, if you had 10 trillion dollars and there exists only 1 trillion in gold, then each of your 10 T is backed by only ten cents of gold! The 10 T you had, just became 1 T of "real money"! This is why fiat money should work for any situation. The reason for world wide economic panic is that too many countries messed up their inflation values over their fiat value.

The other point was introduced to me by reading "The Wealth of Nations" by Adam Smith, written in 1776. He brought out the point that gold is only as valuable as what it can buy. Example, if you have 100 gold, you can only buy say 10 cows. So, why not have the 10 cows? The cows produce milk, which can be sold for more. The 100 gold will raise in value, but will not produce anything. Research the country of Spain for full example. They were one of the richest countries in the world. What happened? They hoarded all their gold and produced nothing. They lost out of all their hoards too because, when you produce nothing, you have to buy all you consume.

Don't get me wrong, gold definitely has its place, but not as an insurer of money, unless we go back to the amounts of money in the 1960's, maybe...

Money is supported by faith.

The Dollar is an IOU of the Federal Reserve Bank.

As long as people have faith that the Fed will honor its IOUs, then it's worth something because people recognize it as real.

Fake money is not recognized by anybody.

There is nothing wrong with the Dollar. Pessimists just like to say there is.

Sure, America has a lot of debt, but other countries have a lot of debt too, and they also have a lot of investment in America. So they have an incentive to see America do well too.

The only problem with America's debt is that more money generated by economic activity will have to be repaid instead of being invested back into the economy (this will be done with higher taxes).

BUT what people don't understand is that a LOT of America's debt is just money it owes to itself. When the gov. collects taxes, it pays it to a lot of Americans. It's just a transfer from one American to another. And when it pays it to a foreigner, some of that may be used to buy American goods/services or invested back into the American economy by buying more American investments.

Playto is right only in that there is nothing backing the US dollar aside from the productivity of the US economy and the federal government's ability to raise taxes. The notion that the Federal Reserve or any of the US's other creditors would stand by while the US economy collapsed is utterly laughable. If you had a trillion dollars in debt assets owed to you would you stand aside and watch while your biggest debtor went bankrupt? Didn't think so. If every country around the world dumped their dollar assets it would very literally be the equivalent of burning the house down to redecorate.

It's pretend...... but you can not live without it.

There is nothing what so ever backing the US dollar. It is in fact, a worthless slip of paper. There is no gold in Fort Knox, it was put up as collateral against our loans to the Federal Reserve Bank. We do not even own our own country we are so far into debt.

If the countries of the world were to turn in their US dollars, our nation would collapse overnight. The Federal reserve Bank and its owners, would simply stand by and watch. The colapse of America would not bother them in the least. It would just mean more people wanting to borrow more money. That means more profit for them. The bankers are in control of the world. The only real money is gold, and they have it all.