@silent_count Re: Just curious
You're discussing fiat currency. Money used to have a physical value based on a commodity, either because it was made from that commodity or because it was guaranteed by that commodity. Traditionally the commodity was gold
Unfortunately any commodity-backed currency has two features that make it undesirable to the modern debt-bound state: You can't simply print off more money to pay off your debt and it doesn't inflate very fast (a gold-backed currency inflates as more gold is extracted from the ground, but this is a very slow process), which means you can't inflate your debts out of existence either. You can re-denominate your currency (for example, you can take $1 of gold and declare it's now worth $10), but that devalues your currency: incomes, prices and debts get an extra 0 on the end, but otherwise nothing changes. The debt remains and earning power is unchanged.
There are advantages to a fiat currency. The biggest for the capitalists amongst us is that economic growth isn't restricted by a lack of available money in the system. The biggest for the state is that it can, as explained, print money and inflate debt out of existence (in a commodity-backed currency this would be the equivalent of finding a few-billion dollars worth of gold somewhere). Unfortunately the downsides are quite obvious: printing money will devalue it. Though it exists as a legislative construct, nevertheless a fiat currency still follows the basic rules of economics and is still in effect a commodity. The first rule of commodities is that the value is dictated by the available supply: if supply of a commodity increases, its value generally decreases. If supply is restricted, its value generally increases. In the case of a commodity like copper this would mean that the price chasnges variant with the available supply and the relative demand. In the case of money, an increase of supply means the monetary "value" - the amount that a dollar can purchase of anything - is reduced.
If your economy inflates at about the same rate as your currency inflates, the currency will tend to retain its value. If your currency inflates faster than your economy grows (either by increasing the supply through printing, or by reducing the demand through a stagnant or shrinking economy) then the value of your currency decreases. In extreme cases you get a zimbabwe, where the supply of currency increased at the same time as the economy was destroyed by poor government behaviour. In less extreme cases you get a situation where a barista or waitress in the US earns what used to be a living wage but now has to be supplemented with tips in order to earn enough just to survive - because the wage stayed nearly static while the currency was inflated by increased supply.
And then this ties into arguments over all sorts of economic topics, such as minimum wage, taxation, cost of staple necessities, "cheap imported labour" and so on and so forth. All this because successive governments decided to enact polices that inflated the money supply for various reasons of their own (corporate profiteering, "creation" of "wealth", or funding the latest social engineering project by "borrowing" from the first union bank of unicorn farts and rainbow fantasy). The economy appears to grow because profits and wages appear to increase in numerical terms, but the reality is that it may be stagnant or even shrinking.