fiat money

Definition

Money which has no intrinsic value and cannot be redeemed for specie or any commodity, but is made legal tender through government decree. All modern paper currencies are fiat money, as are most modern coins. The value of fiat money depends on the strength of the issuing country's economy. Inflation results when a government issues too much fiat money.

Use fiat money in a sentence

While modern currency is used on a daily basis to purchase a myriad of items, it is actually considered fiat money because it has no real value on its own; its value directly depends on the issuing country's economy.

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fiat currency Fibonacci arcs