Why Is Money Valuable?

money-valuable Credit: JUAN BARRETO / Staff/AFP/Getty Images

Money itself has very little or no actual value. The value of money is tied to the belief of those exchanging money that the money may be exchanged for goods or services.

As long as the people providing goods or services believe that money can be exchanged for something in the future, money retains its value. If the government that backs the money or the belief system that money has value breaks down, money loses its value. Money can also lose its value when a government prints too much of it, making large amounts of money readily available and causing inflation.