by tonytran2015 (Melbourne, Australia).
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You need to know about your money in order to understand the many actions of your government.
1. Fiat money
Figure 1: Fiat money are paid to government employees. All citizens have to pay their taxes with that fiat money.
Nearly every country in the world uses money issued based on its governing power. Such a money is called fiat money.
A fiat money is not guaranteed by any goods such as gold or silver. A fiat piece of money is just a certificate of some amount of work done for the government by some of its employees and those certificates can be used by anyone to pay taxes to or buy some goods or service from the government.
Refusal to pay taxes results in jail terms. Therefore the population at large have to exchange their goods or service for those pieces of fiat money from government employees so that they can have fiat money to pay their taxes to avoid jail terms or to buy goods and service from the government.
It is quite risky to keep too much of any fiat money. The threat of demonetization alone can make the holders of the money suffer and submit to whatever oppressive demands from the issuer of the money if they don’t want to lose all its value. (Even China has been under US pressure when it owned about $1200 billions US in debt in 2016.)
Some people can manage to keep just only enough of fiat money to pay their taxes and daily expenses and so they can survive any devaluation or demonetization.
. How Much US Debt Does China Own, about.com, http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm., accessed Jan 10th, 2017.
. Tyler Durden, US Treasury Gives Explicit Warning To China, Germany And Japan Not To Devalue Their Currencies, zerohedge.com, http://www.zerohedge.com/news/2016-04-29/us-treasury-gives-explicit-warning-china-germany-and-japan-not-devalue-their-currenc, Apr 29, 2016
. Venezuela follows Indias footsteps in demonetization scheme, econotimes.com, http://www.econotimes.com/Venezuela-follows-Indias-footsteps-in-demonetization-scheme-445257
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