The modern monetary system is based on fiat money, which has no intrinsic value from "summary" of The Bitcoin Standard by Saifedean Ammous
In the modern monetary system, fiat money serves as the primary medium of exchange. Unlike commodities or precious metals like gold, fiat money has no intrinsic value. Its value is derived solely from the trust and confidence people place in the issuing authority, typically the government. This system represents a departure from historical forms of money that were backed by physical assets with intrinsic value. In the past, money was a commodity that had value independent of its use as a medium of exchange. However, with the advent of fiat money, the link between money and physical assets was severed. Fiat money is essentially a form of currency that is declared legal tender by a government but is not backed by a physical commodity. This means that the value of fiat money is not based on any underlying asset but rather on the faith and credit of the issuing authority. The reliance on fiat money has significant implications for the economy. Without the constraint of a fixed value tied to a physical asset, governments can print money at will, leading to inflation and devaluation of the currency. This can erode the purchasing power of individuals and destabilize the economy. Furthermore, the lack of intrinsic value in fiat money can also lead to a loss of trust in the currency. If people no longer have confidence in the issuing authority or the stability of the currency, they may seek alternative forms of money or stores of value.- The modern monetary system based on fiat money represents a departure from traditional forms of money with intrinsic value. The reliance on trust and faith in the issuing authority can have far-reaching consequences for the economy and people's confidence in the currency.
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