Types of money

We can further classify money into fiat and commodity. People accept fiat paper money because they are forced to by the King or Government, and they feel confident they can use it later to purchase what they need. If people lose faith in the money or there is too much paper money, then that money becomes worthless. We see this during times of trouble, such as with the US Confederate States, Weimar Germany, China in the 1940s, and now in Zimbabwe. Our Federal Reserve dollars we use now are fiat paper money.