Not quite. The government imposes a tax, the tax is due in the state's unit of account. The government can then spend its unit of account into circulation, and

Not quite. The government imposes a tax, the tax is due in the state's unit of account. The government can then spend its unit of account into circulation, and later accepts it back in payment of taxes. > Contrast with a time when currency was pegged to a physical asset like gold Even when a currency is constructed from a commodity, it is not the commidity that is the money. It is a commodity that bears the stamp of the sovereign. > and GBP so no depreciation in something like 300 years. Savings actually had meaning. When money was constructed from a commodity there was a terrible shortage of coin to support the economy and it was a horror show for almost everyone. It's certainly possible to have price stability and full employment, but if you're going to choose, a bit of inflation is much, much better than deflation.