How Does a Dollar Get Its Value, and Why Does It Change?


Why is a physical United State dollar bill worth $1?

For the longest time, the dollar was worth as much because it was backed by the gold standard. The value of all bills in circulation were worth the value of gold kept in the United States’ gold reserves. In 1971, however, the United States stopped using the gold standard and started using a much more advanced and complicated system that regularly increased and decreased the value.

Yet a $1 bill is not worth one British pound or one of any international currency. Heck, it’s not even worth a single bitcoin. These days, all currencies are constantly fluctuating and value due to country-specific economic and political factors.

Regardless of the dollar’s current value, you’re still purchasing a $1 item for $1. How does that make sense if its value is always changing? Fortunately, the good folks at Ted created this helpful cartoon to teach you all about the dollar, how it’s valued, and why it’s worth what it’s worth. Once you understand how our complex currency system works, you might appreciate the cash in your wallet more than ever.

The dollar, like a share of stock, goes up and down in value. At the end of the day, you still have that same bill and same share. It just might go a bit further than it did before.

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