> The US currency is backed by the US economy, due to it being legal tender (i.e., form of payment) for all debts governed by US laws. This is true. The deman

> The US currency is backed by the US economy, due to it being legal tender (i.e., form of payment) for all debts governed by US laws. This is true. The demand for US currency is driven by demand to access good and services (or even to exchange to other currencies) denominated in USD. > the Fijian dollar is roughly half the value of the US Dollar, but Fiji has one of the smallest militaries in the world. It's value holds up because you have to spend FJD in Fiji for commercial transactions. These comparisons aren't useful. A comparison of USD to another currency would need to fully account for quantity of currency in circulation, and the liquidity (transaction volume) in exchange markets. Generally speaking, comparing currency values in USD is not useful - it can be more useful to look at purchase parity (how much it costs to purchase the same basket of goods in another country), or size of economy (e.g. measured in USD). Edit: Another way to look at things is that it doesn't matter how much a currency is worth in USD. What matters more is the rate of change of that exchange with USD. The faster the currency devalues against USD, the less quickly market participants can adjust and effectively "price" good and services, leading to the currency's further collapse and potential abandonment for a more "stable" currency.