Quote from: ~~~~~ on June 30, 2011, 11:13:26 AM

Acceptable for paying tax.

Quote from: hugolp on June 30, 2011, 12:39:17 PM

Fiat currency is a currency imposed by force. That is its definition.

Before reading this topic, I was under the impression that taxes, collected by force if necessary, is what gives fiat money its value. However, it seems there is a debate about whether it is taxes or force that is most responsible for the value of fiat money. Anyway, I think it is possible to build hypothetical scenarios where either force is the reason a fiat currency has value or taxes are the reason for the value.

An example of force giving fiat money value is easy. Imagine a society where there are no taxes but the government can print up new fiat money at will. If the government forced everyone to use the currency for all transactions then the currency would have value purely by force without requiring any taxes.

An example of taxes giving fiat money value isn't so easy but perhaps it is possible. Imagine a society where the government decreed each citizen should pay a head tax using government issued head tax coins. Paying the head tax was completely voluntary, but people who didn't pay the head tax would have their name posted for everyone to see including voluntary government employees such as fire fighters, police, snow plow operators, pot hole repair people, etc. These voluntary government employees would receive head tax coins as payment for their public services. The public display of people who didn't pay the head tax would also be seen by family members, social organizations, places of businesses, patrons of business, employers, employees, etc. In this example nobody would be forced to pay the head tax and nobody would be forced to us head tax coins as currency. However, I believe the head tax coins would be government issued and would be valued as a currency. Would the government issued head tax coins be considered fiat currency? If it were considered fiat currency, then it would be fiat currency that got its value without force.