Post
Topic
Board Economics
Re: What gives a fiat currency its initial value?
by
BubbleBoy
on 30/06/2011, 13:45:40 UTC
Dont try to redefine force. Democracy includes the use of force. But this is not about democracy. Its as simple as saying that you were wrong when you said that fiat money, that is defined as a currency imposed by force, could appear without force. Its false by definition.

Your definition is wrong. Fiat money is the rational choice of democratic societies (*. Democracy does not require the use force, take for example consensus. Therefore, fiat money is not imposed by force.
If I and my beer buddies agree to settle our drinking debt by marking it in a notebook, we've just created a rudimentary form of fiat. No force required. The notebook has no intrinsic value and is not a binding contract, yet the full faith of the participants give it value.

(* that is, if your renounce 100 year old economic fallacies, and come to accept mainstream economics; I have't expanded on this point and don't intend to in this thread.


Government spending creates supply. Government taxation creates demand. Then there is a process with relations and consequences, as you say, but it does not change the fact that government spending creates supply and government taxation creates demand.

Yes, suply and demand does not give value to an object. That is correct. So?

So by connecting the two quotes, you are agreeing with what I said all along, that using a currency for tax purposes does not give it value.