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Why fiat currency in a stable economy like the US, may have more meaning then in...

Why fiat currency in a stable economy like the US, may have more meaning then in countries with unstable leadership and political unrest?

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Answer #1

Fiat currency is a currency with no intrinsic value but it has a government decree. It indicates that if people have trust in the government they will be willing to accept the currency because they believe that government will pay them in case the currency is not accepted by anyone else. Countries where there is unstable leadership and political crisis people do not trust the government and therefore they are not as willing to accept the currency as they were in a stable economy. It is very important for fiat currency to have government trust because it is accepted by the general public only because government promises to pay them an equal amount of money when currency is not accepted by anyone else.

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