How Does Money Become Worthless?

Money becomes worthless when people stop believing it can buy things.

Imagine you and your friends are playing a game where you trade paper clips for candy. At first, everyone agrees that one paper clip is worth one piece of candy. But then, one day, someone brings a hundred paper clips and says they're worth a hundred candies. Soon, others start bringing even more paper clips, and no one has enough candy left to trade.

Money works like that game. If too many people want to buy things but don’t have enough money, the value of money goes down, just like how your paper clip lost its power in the game.

Sometimes, a country prints too much money, like if you and all your friends started printing paper clips on tiny printers. Soon, there are so many paper clips around that each one is only worth a little bit of candy. That’s when money becomes worthless, it can’t buy as much as before.

If people stop trusting the game, they might even start using something else to trade with, like stickers or toys!