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A twenty dollar note costs a few cents to make. Why is it worth twenty? Because modern money is fiat money. Fiat is Latin for let it be done. It can't be swapped for a fixed amount of gold or silver. The last link to gold broke in 1971. Instead, its value rests on three supports. The state accepts it for taxes, which creates steady demand. It's widely accepted, because you trust the next person will take it too. And people trust an independent central bank to keep its value reasonably stable. Many major central banks aim for about two percent inflation a year. Break those supports, and money fails. Germany saw it in 1923, when workers were paid twice a day. In Zimbabwe, output collapsed and deficits were covered by printing money. Monthly inflation peaked at an estimated 79.6 billion percent in November 2008. The central bank even printed a 100 trillion dollar note. In 2009, Zimbabwe abandoned its own currency. Decree alone can't hold up a currency. Between a strong currency and a failed one, the difference is never the paper. It's the institutions. Full free lesson: Basics of Banking, topic 10, at Malla Banking Academy. Next: Fractional Reserve Banking.