Value doesn’t live in objects—it lives in people.  Only the unthinking believe gold, bread, or paper has value in itself.  Value is created by the act of wanting.  As Menger explained, goods become valuable because they satisfy human needs.  They don’t contain value, they acquire it through human purpose.  The same logic applies to money.  It’s worth isn’t objective.  It rests entirely on subjective valuation.

Those who think otherwise fall into the utilitarian trap.  They imagine value as something measurable, like calories or volts.  They assign numbers to emotions.  Suppose one says a steak gives 10 utils and an apple gives 5.  Does this mean every person prefers the steak?  Of course not.  The sick might want fruit.  The poor might prefer bread.  The fasting monk wants neither.  “Utils” are nonsense.  Value isn’t arithmetic—it’s choice.

Money follows the same rule.  For anything to become money, it must first be a valued good.  It must have pre-existing use before serving as a medium of exchange.  That’s the foundation of Mises’s regression theorem.  Money traces back to barter.  Gold was first a good desired for its beauty, rarity, and workability.  Because it had value yesterday, it could be trusted today.  Paper notes, however, had no such origin.  They were born from decree, not demand.

Imagine Crusoe and Friday using sand as money.  If Crusoe can collect more sand unnoticed, he gains at Friday’s expense.  The purchasing power shifts.  The new sand dilute the value.  This is the blueprint for inflation.  The first receivers benefit, the last suffer.  The so-called miracle of new money is theft in slow motion.

The modern world isn’t far from Crusoe’s island.  The early receivers of paper credit—banks, government, and the political class—gain first.  Everyone else pays later through higher prices, diminished savings, and false signals of prosperity.  The illusion of wealth precedes the crash of reality.

Real money—commodity money—anchors value in human action and past exchange.  Fiat money floats on faith and manipulation.  One is rooted in voluntary trade, the other, in coercion.  To understand the value of money is to see through the illusion of paper wealth.  Money’s worth isn’t printed—it’s remembered.

Reference

Ludwig von Mises; Money, Method, and the Market Process