We do get something -- a lot, actually -- for very little effort. How?
All goods and services (i.e., wealth) creation involves not only production (the engineering part) which is easy to see but also exchange (i.e., trading of one’s produced output for produced output of another person). The exchange part is hard to see unless one is involved in barter. Getting money for one’s produced output and buying other people's produced output with that money is just an extremely efficient form of barter. Therefore, going through this thing called "money" makes barter (trading) extremely efficient. So, there you have it. One is getting something (one becomes extremely efficient at barter) by using fiat money that costs very little to produce.
Of course, the producer (the seller) must trust that the money received will retain its value over time to a sufficient degree. This is the main challenge of all currency management by governments or anyone else: Maintain the trust. Currency failure occurs when this trust is compromised (actual rampant inflation or an expectation of rampant inflation).
But we have major problems with fiat money: Who gets to create it? How much should be created or destroyed and when? And once created how should it be introduced into circulation? And if some money needs to be destroyed, whose money should be destroyed?
Once one realizes that 97% of economic exchanges (trade) is done using bank deposits (yes, bank deposit=modern money) then one will begin to see why banks are so important, because they create (and destroy) and distribute (by lending) this very important commodity. It is a common misconception that governments create money (yes, they create some, called base money or cash - coins, paper bills, reserves at the central bank) but most of it is created (or destroyed) by private banks, as they are able to leverage (pyramid) up to 10 or more times the government created money or deleverage and destroy money.
It is this private banking industry’s money creation or money destruction that enables booms (more money creation via more lending) or recessions (less money creation via lending less) or deflationary depressions (credit crunch--very little lending). One way to counter a recession or a credit crunch is for the government itself to create money (or borrow) and spend it (fiscal stimulus or even bailouts or purchases of crap assets by the central bank, etc). This is an attempt to counter the money destruction (money is destroyed as loans are paid back by borrowers and new loans don't entirely replace the destroyed money). This is what Japan (since 1990) and U.S. (since 2008) have been doing.
Both governments are waiting for the credit crunch to go away and more normal private (bank) money creation (i.e, lending) to resume. Many people think it will not resume until bad debts are wrung out of the world economy (i.e, take the hit of a worldwide deflationary depression). I think a worldwide deflationary depression will lead to much, much chaos and probably wars and extreme poverty.
But I think that there is another way. We need to modify the process of money creation and distribution itself so the real economy (trade) is not so severely impacted (one major reason for extreme booms and depressions is severe changes in money supply that occur due to too much lending or too little lending).
Disclosure: No Positions