CONFIDENCE IN THE MONEY

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Here is WHY I often say worthless imaginary paper fiat!

"public confidence in, and hence demand for, paper
money depends on the ultimate confidence, or lack thereof, of
the public in the viability of the issuing government"

My money, your money, our money, is merely WORTHLESS PAPER! Being backed by the government of the United States of America is just NOT reassuring enough to me!

Use your worthless paper to buy & hold some GOLD!
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An intangible, but highly important determinant of the demand for money, is the basic confidence that the public or market has in the money itself. Thus, an attempt by the Mongols to introduce paper money in Persia in the twelfth and thirteenth centuries flopped, because no one would accept it. The public had no confidence in the paper money, despite the awesomely coercive decrees that always marked Mongol rule. Hence, the public's demand for the money was zero. It takes many years, in China it
took two to three centuries, for the public to gain enough confidence in the money, so that its demand for the money will rise from near zero to a degree great enough to circulate throughout the kingdom.

Public confidence in the country's money can be lost as well
as gained. Thus, suppose that a money is King Henry's paper, and
King Henry has entered a war with another state which he seems
about to lose. King Henry's money is going to drop in public
esteem and its demand can suddenly collapse.

It should be clear then, that the demand for paper money, in
contrast to gold, is potentially highly volatile. Gold and silver are
always in demand, regardless of clime, century, or government in
power. But public confidence in, and hence demand for, paper
money depends on the ultimate confidence, or lack thereof, of
the public in the viability of the issuing government. Admittedly,
however, this influence on the demand for money will only take
effect in moments of severe crisis for the ruling regime. In the
usual course of events, the public's demand for the government's
money will likely be sustained.

See this and a lot more in The Mystery of Banking