88 thoughts on “Commodity money vs. Fiat money | Financial sector | AP Macroeconomics | Khan Academy

  1. Fiat money gives too much power to the few. Controlling the money supply and artificially lowering interest leads to boom and bust.

  2. Thanks for this video! In reality, neither has value like you mentioned. It is based on faith, just like everything else is. You believe that you have a 1 dollar bill, but in reality, you have nothing. On another planet, your dollar is worth nothing. Even in some countries.

  3. The dollar, it used to be great backed up by physical gold, now is only backed by the government good faith, I think I want the gold back

  4. Maybe I missed it..but why was it okay to turn the currency to a fiat money?…how did the citizens at that time respond to that change?…was it voted on?

  5. Venerating the gold standard is bad economics. The money is dollars/euros/whatever because that's what you have to pay your taxes in. Using gold in transactions would be inane.

  6. Silver and gold are just arbitrary metals that have been traditionally used as currency in different cultures. They just as easily could have used iron and palladium. However, you can't just print silver and gold. It anchors the currency to something physical and finite.

  7. The danger of Fiat money is that it is created just as a mint wants, unlike silver and gold. This opens up a possibility to contol the money, and, ultimately, ourselves. In my opinion.

  8. Wait-so, banks fail, government is bankrupt and can't back up their promise to pay, where are we then? What can fiat money be traded for if it has no value?

  9. could you please not use the word money for fiat currency. money has a property that fiat currency can't fulfill "A store of value". fiat currency has no value it's all tied to debt to prove that you have some economic value (even if you didn't do anything). At the end of the day fiat currency allows you to lie to everyone else.

  10. Americans used to pay other countries/civilizations in silver because they valued it more than gold. I think this was Native Americans and South Americans

  11. what is so great about gold? what if you can trade in a crappy box TV for a flat screen 5 years later that is progress. if capital isn't incentivized to move you hault progress.

  12. so if the fiat currency is so bad what is stopping you from buying a commodity? the truth is there is risk in a commodity too.

  13. there's a part of the equation you're not taking into account and that is money supply gold has a roughly finite Supply same thing with silver and that gives it a store of value that when you continuously print money into existence it loses its value and the more you have of it eventually it will crash just as all currencies that you can just print into existence and the rich get richer every time the money supply expands the bankers and the corporations and the poor suffer the pain of higher prices until the money does not work anymore it happened before in history it will happen again

  14. Its safe enough so far. Because people are conditioned and indoctrinated to accept fiat money. It might be make believe. But its powerful stuff. Go drop a hundred in the middle of a shopping mall. And watch how many people pick it up, As long as people think its real. Then its real to them so it seems

  15. Using gold or silver today would simply be a stupid use for such precious metals. Gold is far to useful to just make coins

  16. FIATS ARE MORE STABLE THAN GOLD AND SILVER AND CRYPTO CURRENCIES , THE FIAT SYSTEM WILL ALWAYS BE HERE I THINK , EITHER DIGITAL FIAT OR NEW FIAT SYSTEMS IN THE FUTURE AFTER ONE FAILS THEY WILL JUST CREATE ANOTHER , THE BANKS ARNT GOING TO LET BITCOIN AND GOLD BECOME MONEY AS THERES A LIMITED SUPPLY , WHICH MEANS THEY WILL NEVER BE STABLE , IN THEORY TO SERVICE THE WORLDS GDP , GOLD AND BITCOIN WOULD CONTINUALLY INCREASE IN VALUE , AS THE GROWTH WOULD REQUIRE MORE GOLD AND BITCOIN , BUT ONLY A LIMITED SUPPLY SO IT WOULD ALWAYS EXPAND THE PRICE TO IE: MILLIONS AN OUNCE , PEOPLE WILL JUST HOLD INSTEAD OF SPENDING THEM THEY MAY BECOME SCARCE , AS LONG AS THERE NO HYPERINFLATION THE CURRENCIES MAY SURVIVE ALOT LONGER THAN WE THINK , AND THEY WILL ADJUST THE INFLATION TO GOODS AND SERVICES ACCORDINGLY , IT JUST MAY BE IN A HUNDRED YEARS A CUP OF COFFEE WILL BE 100 BUCKS , BUT YOUR WAGES WILL BE 50 GRAND A WEEK , 100 YEARS AGO YOU MADE 600 DOLLARS PER YEAR ,NOW YOU MAKE 35000 A YEAR , YOU SAID THAT 100 YEARS AGO THEY WOULD OF THOUGHT YOU WERE CRAZY !!!!!!!

  17. The bogus fiat money is not the same as real money( gold & silver), because the value of real money is within the money itself, unlike fake money that has its value in the hands of few greedy men in New York.

  18. The note is not money. The note is a score for a game that is counterfeited. A debt note is a claim on the future. A silver dollar is a claim on the past I can hold, same with gold. Gold and silver is a precious metal, a claim on the past. The debt note is a claim on future labor that may be repudiated. You are very confused about what money is.

  19. Shouldn't note read LAWFUL TENDER instead of "LEGAL TENDER" just like the $10,000 bill …on demand as authorized by LAW?
    Doesn't our Constitution recognize lawful money as silver and gold anyway?

  20. big mistake the guy making this video is making is that he says fiat currency and silver/gold are basically the same. the big difference is that currency can be made at any time thus reducing its value. in order to get more gold or silver you need to mine it which costs currency/resources so you cant dilute the value of that gold or silver because the metal represents what it cost to mine it.

  21. Look at the Constitution, Article I, Section 10, first paragraph. It says " No State shall emit bills of credit, make any thing but gold and silver coin a tender in payment of debts". That defines gold and silver as real money, and anything else is counterfiet, and unconstitutional. The govenors of all the States are sworn to uphold the Constitution, and are responsible for enforcing this requirement. Why don't we make them do it? Because most people in the USA, and around the world, are ignorant about how an honest money system is suppose to work.

  22. Read the first paragraph, Article one, Section 10, US Constitution. It is the supreme law of this land.

  23. Umm. Federal reserve notes are backed in labor . Or rather by loans with labor or the tax value of labor as collateral .

  24. Silver and Gold is valued as money because of their durability as well. They are basically indestructible, so it is the best form of a store of value. This is the best form of trade.

  25. Uh… how did this video miss the most important point of fiat money – that it is BORROWED from the central bank? The borrower at some later time has to get it back and repay his debt to the bank – this is the underpinning of its value more than its status as legal tender. So you can trust in its value because somebody else needs it. It is not just some shared illusion.

  26. Calling anything valuable 'money' is a misnomer, only valuable metals are real, or sound money; anything else, tomatoes, cows, paper, firewood, etc… is just barter. Intrinsic value coinage is barter perfected. Gold & silver were selected by the free market as money because they were & are an honest & reliable way to measure, store & transfer value, or wealth. No one wants to store paper money under their mattress because paper money always looses value – it never stores it, at least not efficiently, and frequently seeks or reverts to its intrinsic, or replacement cost = 0.

  27. I'm surprised that you made this video not fully understanding the value of gold and silver. They have value because they are rare. When something is rare or hard to come by that is what gives it value. As an example the money that we have now would be like a painting made by me. And the money they had then would be like having a van Gogh original.

  28. Good video but doesn't stress the point enough that real money has intrinsic value, which cannot be created out of thin air by order of some government or person.

  29. Gold has always been a good long term investment, it holds its value and you could actually get 30 year plus bonds on it that will hold its value when Gold was the standard.

  30. Everyone better get ready for cryptocurrencies and this RIFD chip aka "The Mark of the Beast" smdh this society is finish but biblical prophecy has to come to pass.

  31. Surprisingly we can survive by eating fiat money when we don't have any food to eat but we or any other creature can't survive by eating commodity money.

  32. I don;t think our dollar is fiat money. Fiat money creates no debt. that eliminated the US dollar as fiat. it is a credit from the bank a portion of the US debt.

  33. What might make us scared is that the government banned the possession of physical gold during the Great Recession and effectively created a monopoly for it by absconding it from the general public. This paved the way for a fiat currency economy 🙁

  34. The dollar has value because they force people to sell their oil/goods in dollars thats what it gives it value
    its still can be printed and get my money stolen by devaluing my paper money by printing more money

  35. At 0:40, you can easily see the date on the $1 silver certificate is "SERIES OF 1928", underneath "Washington, D.C." and the $10,000 gold certificate is "SERIES OF 1934". I expected something like 1913, because that's when the Fed was founded. so, these might not actually represent what "the very first US dollars looked like" (stated at 0:32). –> Guess I'm easily disappointed.

Leave a Reply

Your email address will not be published. Required fields are marked *