why is fiat money valuable 
fiat money is backed entirely by the full faith and trust in the government that issued it in contrast to commodity based money such as gold coins or paper bills redeemable for precious metals this has merit because governments demand that you pay taxes in the fiat money it issues everybody must pay taxes or face stiff penalties or prison so people will accept it in exchange this is known as chartalism other theories of money such as the credit theory suggest that all money has a credit debt relation so it doesn t matter if money is backed by anything to maintain value 