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My first grader wanted to learn more about money today.  I thought quickly on how to simplify a monetary system gone haywire.   I took a dollar bill out of my wallet and placed it next to a piece of paper with a "daddy dollar" I had drawn on it.  I asked, "Which dollar would you use to buy the necklace you wanted to buy today?"  She pointed to the US currency.  I asked, "Why?"  She said, "Because its real money."  I asked what makes it real money.  She said, "because everyone says it is."  Bingo.  I explained that our dollars have value because everyone says they do.  We agree on it.   The problem is, what happens if everyone decides they don't?  I asked her what the US currency and the daddy dollar have in common.  "They are both like paper."  I added a 1 oz silver coin to the table.  I explained in the event that everyone decided to not agree that the paper was worth anything anymore, the  silver dollar coin was worth more.  "Why?" she asked.  "What if everyone decided the silver dollar wasn't worth anything either?"  "Because", I said, "the paper is of no use once it's not used as dollars.  However, the silver in the silver dollar can be used in many more ways and would be of more value to more people.  It can be melted and used for electronics, health care equipment, its a great sanitizer, and it doesn't tarnish or degrade.  The more uses an item has, the more value it will hold."  

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