Hook
Blackbeard's former bo'sun.
The driving of the currency by what Wikipedia states is what I disagree with. The currency is driven to acceptance only by the tax liability. From there this makes it the accepted monetary unit even if you dodge taxes.
Those are indeed correct. coins and paper are just representation and for easy payment for small purchases (unless one happens to be a dealer with a suitcase of money!). In essence that commodity money isn't the nature and source of money.
I understand the tax obligation for US citizens and resident foreign investors. I also understand that many other countries do the same. But what about countries with territorial based systems, so-called tax havens like Panama? Since Panamanians (and Panama-based legal entities) are not required to pay tax on foreign domestic gains, what is their motivation to invest in US dollars versus some other currency? In these cases, aren't we then back to some form of the "full faith and credit" argument for perceived value?