Fiat currencies are not a confidence trick.
Robin Green
1

Yeah. I don’t really want to get into this kind of esoteric discussion, but there are a number of failure modes that fiat currencies can suffer. There is stuff central banks can do but it is limited by the underlying economy, and there is a vicious circle: if the economy tanks enough future tax receipts are mostly worthless, and if you then get hyperinflation this can tank the economy even more. Also see currency boards, and the GBP dropping out of the European system. Fiat currencies rely on awful lot of a common belief of “this is fine” even if it is not.

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