The Progressive Pulse blog had a really useful post by Charles Adams yesterday asking two questions. The first is what is fiat money, which is the type we use? And second, how to maintain confidence in the fiat money system? I strongly recommend the post, but could not resist sharing its opening:
What is fiat money?
Fiat means ‘let it be‘ or ‘let there be’. In the bible, God says ‘Fiat lux’– let there be light. The Lord’s prayer says, ‘fiat voluntus tua’ – thy will be done! In a sovereign country, the Sovereign says ‘Fiat money’ – let there be money. In a democracy, the Sovereign is the state which means all of us. We say let there be money and there is!
Illustrated by Cohenbaum.
It's almost back to the theme of economics as religion, and in a very real sense it is. Fiat money has value because we believe in it.