“People losing confidence in the Dollar”, actually means that people will use other forms to hold wealth instead

in Wealth by

The only thing that backs the Dollar is usage of the Dollar. If the economy – the job market is terrible, then dollar usage will be very low, thus causing the Dollar to have very low value. If people don’t even have dollars to use, they won’t use them. Further, people might not even really want to use dollars. Thus, they will go to an alternative such as to trade work for food, or self-make their own requirements like clothes, and they make economic arrangements with others, and they don’t need or want dollars. They need food, clothes, and other products, and they barter.

Thus, the degree the Dollar is not used is the degree the Dollar is irrelevant and its value is diminished as an instrument for wealth exchange. The Dollar is actually just worthless paper that the people have decided to use as an instrument for wealth exchange right now. However, the people will choose to use other forms for wealth exchange in the future, thus causing the dollar to become worthless.

However, hard assets maintain their value and is what should be used to hold wealth.

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