Monopoly Money vs. US Dollar- What's The Difference?

VS.

One of my favorite economists, J.S. Kim, refers to our US dollar as "monopoly money".  Is it?

Let me ask you a question.  What makes our US dollar different than monopoly money?  It's slightly different colors.  The US paper currency is made of cotton while monopoly money is made of paper only.

Here's a better question.  As a thought provoking exercise, let's say one day everyone substituted the US bills in their pockets, and exchanged them for Monopoly money of the same currency. So, now, ZERO US dollars as we know them exist, and everyone used the paper monopoly money.

What would change? Think about it? What would really change?

In my opinion, nothing would happen.  Why? Because if everyone else has the same paper currency, and accept it as currency, then life would continue as usual.

So, what's really going on here? 

This thought exercise reveals to me that really the only thing that makes the dollar worth anything at all is confidence.  Confidence that the dollar is an accepted store of value.  It doesn't matter if you replaced the picture of Benjamin Franklin with a picture of Michael Jackson, it's still a US treasury note, and it still holds the same value because of confidence.

On to my next point.  What do you think happens to the confidence in the dollar bill during inflation?  When the currency is inflated and debased as much as it has during the last 3-5 years, confidence goes down!  When confidence goes down, people don't trust it, including foreign investors. 

A currency is based on confidence, and quite frankly, with this much printing and money creation going on, I'm losing my confidence, and fast.  How are we supposed to save money, when the currency is printed at a rate like this?

Let Freedom Ring!

B.