The full faith of the government, which provides a useful service to the society: a commodity specifically designed to facilitate trade. Fiat money is in theory superior to precious metals and societies should switch to fiat currency naturally, not due to coercion.
Sorry, this is nonsense by definition. If a currency is not imposed by force its not a fiat currency. Its the definition of fiat currency.
I guess it depend on whether you believe democracy is a valid way to agree on societal issues. Libertarians and anarcho-capitalists reject democracy as violence, and I don't want to open that old debate. The use of a stable fiat currency sure does seem to correlate well with being a successful society, and in the end people will vote with their feet - and that too is a form of democracy. I hear Somalis put good price and gold these days
Quote from: BubbleBoy
Denominating taxes in a specific monetary unit creates supply of that unit, usually oversupply (inflation), not demand.
Wrong again. People need the currency to pay for taxes, therefore creating a demand for the currency. The fact that governments abuse the currency and supply overcomes demand does not mean that taxation creates supply and does not create demand.
Taxation is a process, not an event. If the govt. wants 50% of the potatoes you produce at your ranch, they will get it, and it makes absolutely no difference if those potatoes cost 1 govt monetary unit or 1 billion. Sure, taken in isolation, the act of you selling potatoes and paying tax will create demand. But since throughout history the supply of govt money was always higher than the demand, we can safely conclude that the tax process, the process by which govt derives wealth from the productive society, does not give value to tax money. That's why I'm saying "being acceptable for tax" is an incomplete explanation for the value.