this post was submitted on 13 Aug 2023
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You are right in that it increases people's belief in money because it is the primary source of revenue for states. But if the majority of people did not believe in the piece of paper, it would be worth nothing. That is the fundamental value of money as we know it.
There have been states where stones were the currency simply because the inhabitants believed in them.
Money is a physical representation of the concept of value. Saying "what gives money value" is like asking "why does rain make clouds."
This is why printing money decreases the value of the currency - the value it represents has not changed so the value is diluted across the currency as the amount of currency expands.