Fiat currency has no intrinsic value and so it is the same as a fetish for something that is appealing but ultimately worthless. How did we come to acquire this fetish? It originates from the times when paper currency was symbolic of the ability to redeem the paper for material goods. Naturally, its value is dictated not only by this desire (but is reliant on it) but also the quantity of the notes and coins available. It relies on the assumption, also, that others will continue to hold the same fetish.
It started out when a very reliable source of fiat (the Government) issued a currency that was redeemable for hard assets. Because of the reliability of the currency, the difficulty to copy it and the punishments for doing so, this chosen type of fiat, Government fiat emerged.
Now there is no reason not to value similar currencies issued by other agencies, provided they are secure against imitation. We can just as easily use store credit or tokens, provided they are reliable. Perhaps companies will begin to issue credit against their company as payment in the future, a reversal of the Truck Acts?
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