It has value because you need USD to pay your taxes.
Think about it this way: everyone who lives or does business in the US assumes some level of tax liability that can only be settled by handing over USD.
Imagine you locked a whole bunch of people in a room, brought in a goon squad to guard the door, and held up a bunch of poker chips, telling everyone that they had to give you a poker chip to leave the room. They'd be tripping over each other to earn poker chips!
But was there money before there were taxes? Maybe not. I don’t know it’s history. Maybe there were taxes in the form of grain percentages before there was any coin.
Defining money gets into semantic games real fast.
Taxes were paid "in kind" long after coins started circulating. I'm mostly familiar with this happening on the Roman frontier, where farmers gave a portion of their grain, livestock, etc. to the local garrison. Does that make grain and livestock money, since silver and gold coins were circulating at the time?
Similarly, if someone puts up oil futures as collateral when shorting gold, does that make the oil futures money?
Probably best to differentiate between money and legal tender. If you and I have a debt in the USA, the creditor is required by law to accept USD as payment. But the creditor could accept something else as payment.
It has value because you need USD to pay your taxes.
Think about it this way: everyone who lives or does business in the US assumes some level of tax liability that can only be settled by handing over USD.
Imagine you locked a whole bunch of people in a room, brought in a goon squad to guard the door, and held up a bunch of poker chips, telling everyone that they had to give you a poker chip to leave the room. They'd be tripping over each other to earn poker chips!
Brilliant.
This is also a partial answer to the question of why governments need to collect taxes if they can print money.
But was there money before there were taxes? Maybe not. I don’t know it’s history. Maybe there were taxes in the form of grain percentages before there was any coin.
Defining money gets into semantic games real fast.
Taxes were paid "in kind" long after coins started circulating. I'm mostly familiar with this happening on the Roman frontier, where farmers gave a portion of their grain, livestock, etc. to the local garrison. Does that make grain and livestock money, since silver and gold coins were circulating at the time?
Similarly, if someone puts up oil futures as collateral when shorting gold, does that make the oil futures money?
Probably best to differentiate between money and legal tender. If you and I have a debt in the USA, the creditor is required by law to accept USD as payment. But the creditor could accept something else as payment.