How, exactly, does money work?

Where does money come from? Initially it was developed as a means of trade (ie. trading gold coins for some commodity) but these days money is mostly made of inexpensive materials. (A can of soda is not of equal value to a piece of paper) When you get paid at work that money comes from where? Other people who pay for the services that your employer offers or for products your employer produces. But where does that money come from? Other people who do the same thing. Essentially an economy is the moving of money from one person to another. So...money is worth only what people think it's worth. Interesting.

If I'm wrong please correct me, but as I see it economics don't really make sense.

Economic "Recession"

"Carter did not have any more luck than Ford had in curbing stagflation, as economists had termed it. Carter tried to address the price of imported oil and the subsequent energy dilemmas by creating the United States Department of Energy, but his efforts were largely unsuccessful, leading to the 1979 energy crisis, which was also felt in other parts of the world. Carter's leadership was also challenged abroad, with the aforementioned Iran hostage crisis, arguably the biggest blow to Carter's administration. The hostages were only released when Ronald Reagan took the oath of office on January 20, 1981, succeeding Carter."

Quoted from wikipedia

Wow, that sounds a lot like whats going on right now. I've read articles that have talked about so called stagflation going on right now. Not only that we are going through an energy crisis. Think about it, rising gas prices, barrels of oil that cost upwards of $100. And guess what? It ended. After the 70's everything got all nice and peachy, so don't worry. The recession will pass. Economies are cyclical systems that fluxuate up and down as time passes. I'm guessing that we will have another recession sometime around 2050 and everyone is going to freak out just like they are now because the public mind does not have that long of a memory. The public mind remembers maybe 20 or so years into the past, depending on the era, and by the time another economic recession hits the general public won't be able to remember this decade that is coming up.