i agree very much with @jp_koning, fiat money is not a meme. but i don't think characterizing it as a conventional debt instrument quite works either. 1/ jpkoning.blogspot.com/2021/07/the-do…
suppose Bill Gates were to issue a perpetual, never redeemable, non-interest-bearing Gatescoin. Bill Gates' solvency, on its own, would tell us little about its value. 2/
owing to his solvency, Bill Gates would have the capacity to *give* such a coin value, say by committing to put a floor under it in the market, or by creating circumstances in which markets perceive such a commitment. 3/
but this is a kind of quasiredeemability to which fiat issuers rarely resort, and would be quite different from traditional securities where some mix of legal obligations and control rights rather than discretionary intention create a floor. 4/
fiat issuers primarily support their currency by encouraging and coercively enforcing indebtedness in their scrip, or in extremis creating that indebtedness ex nihilo via taxation, generating incentives for people to surrender real goods and services for paper. 5/
nonstate issuers simply cannot do this, and states rarely do the things private issuers might do to support the value of irredeemable paper (like retiring it in exchange for assets, goods, or services). 6/
i think the differences here outweigh the similarities, and arguing that fiat money is like other debt instruments just parameterized a particular way isn't quite right. /fin
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