Difference between revisions of "Fiat money"

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'''Fiat money''' is [[currency]] that is valuable only because it has been declared as such by a governing body. It is not backed by [[precious metal]] or any other resource. Fiat money's value is dependant on [[scarcity]]; [[inflation]] occurs when excessive fiat money is produced. The [[Dollar (U.S.)|U.S. Dollar]] is an example of fiat money.
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'''Fiat money''' is [[currency]] that is valuable only because it has been declared as such by a governing body and is required for settling taxes or other governmental debts. It is not backed fully by [[precious metal]] or any other resource. Fiat money's value is dependant on [[scarcity]]; [[inflation]] occurs when excessive fiat money is produced. The [[Dollar (U.S.)|U.S. Dollar]] is an example of fiat money.

Revision as of 11:36, 19 June 2011

Fiat money is currency that is valuable only because it has been declared as such by a governing body and is required for settling taxes or other governmental debts. It is not backed fully by precious metal or any other resource. Fiat money's value is dependant on scarcity; inflation occurs when excessive fiat money is produced. The U.S. Dollar is an example of fiat money.