What's the difference between a fake promise and a real promise?
The government guarantees that dollars are acceptable for paying taxes. For a promise, that's about as real as you're going to get.
The government guarantees that dollars are acceptable for paying taxes. For a promise, that's about as real as you're going to get.
See: Venezuela, Zimbabwe, Germany ~1920
Those events are indicative of scenarios where the market lost confidence in the faith and credit of those nations. When you can't sell bonds anymore, you implicitly borrow by devaluing the money.
That's where the derogatory treatment of "fiat" money by goldbugs and cryptocurrency advocates falls down. A government can declare that something is worth a dollar, but the market determines what a dollar is worth.
So what happens when the government declares that a candy bar is worth a dollar, but the market determines that a dollar is worth half a candy bar?