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> Fiat is backed by weapons. What does this mean? It's the currency of a country that has weapons. If someone steals my USD, will US use their weapons to get i
by bko 5y ago
> Fiat is backed by weapons.
What does this mean? It's the currency of a country that has weapons. If someone steals my USD, will US use their weapons to get it back for me? If the value of their currency drops substantially, will they go to war with some unknown power that's causing this drop and reverse the change? Countries also change currencies, often during times of inflation.
This is an effectively meaningless statement
- mandelbrotwurst 5y ago> If the value of their currency drops substantially, will they go to war with some unknown power that's causing this drop and reverse the change? They might - that’s essentially what the U.S. has done (or, at least, did for a while) when other nations tried to break the petrodollar system.
- bko 5y agoGood point, but this isn't really a good thing :-/
- thirdplace_ 5y ago> What does this mean? I have found that viewing money as a regular good eases the thought process. The price of money is regulated by demand and supply. Most of the demand comes because government requires taxes to be paid in the fiat money. Also because businesses are required to accept fiat as payment.
- throwawayffffas 5y agoThe argument is that every year the us government will demand you pay a certain amount in USD (taxes). If you fail to comply men with guns (the police) will arrest you and put you in prison.
- TheCoelacanth 5y agoThe weapons are for using against their own residents. US residents need to pay taxes in USD. If they don't, weapons will be used to force them to pay (most pay voluntarily, but if they escalate far enough, the weapons will come out). That means US residents need to acquire USD and are willing to trade valuable assets to do so. That makes USD valuable to US residents. US residents own many valuable non-fiat assets, so non-US residents know that they will be able to find a US resident who will trade them something valuable in exchange. That makes USD valuable to non-US residents. The same thing is true of more or less every fiat currency that has a non-negligible value.
- roenxi 5y agoThe answer to both your specific questions is yes. Although a war won't necessarily restore the value of a currency.
- biztos 5y agoThe implied threat of war is usually sufficient. Or regime change, "police action," targeted sanctions, and so on.