No, dollars don't have value simply because people "agree to agree they have value". They have value for the same reason Hamilton was able to give value to the Continentals- the government has the power to impose taxes, and accepts FRNs as payment for those taxes.
the value of the U. S. government's ability to print enough of them to pay for whatever needs to be paid.
I don't know what you mean by this, but it sounds like a recipe for pure inflation. A government that simply prints money to pay for what it wants generates pure inflation. This is one main reason the Fed is independent of direct government control, because the experience of nations with central banks controlled by politicians was one of rampant inflation.
That is the value. But notice that in your paragraph above the value goes in a circle, from FRNs back to FRNs.
the value of the U. S. government's ability to print enough of them to pay for whatever needs to be paid.
I don't know what you mean by this, but it sounds like a recipe for pure inflation. A government that simply prints money to pay for what it wants generates pure inflation. This is one main reason the Fed is independent of direct government control, because the experience of nations with central banks controlled by politicians was one of rampant inflation.
I wrote that they can print enough to pay what NEEDS to be paid. You responded with a paragraph about printing enough for what they WANT.
By printing what they WANT, they create "controlled" inflation. Your scenario would create uncontrolled inflation, but that's not what I described. Our money has been inflated by 700 to 1000 percent over the past 30 or 40 years. That's pretty stiff in absolute terms, but the fact that it's been controlled so it's taken place over a relatively large number of years makes it more tolerable (or should I say less intolerable.)
In a post above I referred to the situation in France in 1790 to 1793. Comments?
But why did Hamilton go to the trouble to give a value to the Continentals? By the time that he did, nearly all of those merchants who had sold real goods to the Army had sold the Continentals they were holding to speculators for a fraction of the their face value. The effect of Hamilton's action was to enrich those speculators hansomely with taxpayers money. What was his motive?