As Worthless as Dollars

Here is what James Grant wrote in the New York Times on October 26 this year, commenting on the choice of Ben Bernanke as the new Fed Chairman:

"...the post-1971 dollar is purely faith-based. Not since the Nixon years has a holder of dollars had the privilege of exchanging them for a statutory weight of gold. Rather, the dollar is a piece of paper, or electronic impulse, of no intrinsic value. It is legal tender whose value is ultimately determined by the confidence of the people who hold it."

If faith can make dollars valuable, it stands to reason that lack of faith can make them worthless. Something to ponder.