Re: Success of fiat
"Fiat currency and government debt are not the same thing. "
They are intrinsically linked. Specifically to the government bonds, which is what a sovereign default is. Refusing to pay your debtors for a specific loan is quite different to refusing to pay for a bond maturing. All fiat currencies are debt based. If it's not, it's flat rather than fiat.
It'll get waaay off topic to discuss how bonds and money work, but feel free to look it up.
"Though a loss of confidence in the government can be more serious."
If they default, then they've lost the confidence. If a government's bonds are not 100%, then there is a confidence issue.
We've had flat currencies before, and for quite long periods of time. Tally sticks in the UK for example. The creation of private central banks is what pushed us to using fiat, since it's all about borrowing and lending. The first central bank (Bank of England) took it's initial deposits from it's owners in tally sticks.
Fiat didn't just "come along" it was a deliberate creation to make bankers money, by lending to countries rather than individuals, and allowing governments to spend future tax revenue immediately. Once you're on the fiat tiger the only way to get off is to default, which can be made rather difficult depending who your bonds have been sold too (see Argentina).
Most people would actually be happy with flat rather than fiat currency, since it's a lot harder to inflate or deflate. The banks would not, and in general governments would not either, as it requires balancing of the books. It's also a lot harder to fight wars if you've got to pay for your rhiney toys upfront, rather than over the course of 70 years.
"Many governments have defaulted on their debts, but their currency has survived perfectly fine."
Any examples of this? Economies certainly survive (being based in the real world), but usually the currency takes a hit, and is often replaced or re-issued, which is very much a case of the currency not surviving.
"often create new ones and allow people to bring their existing holdings across"
But that's still a failed currency, and a default. Even when the government pays 99% it still counts as a default, hence why Greece has technically defaulted more times than it has truly defaulted*. In the same way as moving from a theoretical commodity based currency (gold standard, sterling) to a fiat one without a complete redemption and re-issuance is also a failed currency, although no-one wants to admit it.
"I don't know why you complain about seigniorage though."
Did I? Must have missed that :) I've not got a general problem with it, as long as it's useful. So seignorage from currency issuance is fine, since the smaller notes and coins can have negative seignorage. My issue is that I dislike hidden taxes and subsidies, and non-physical seignorage takes it's value from the current issuance.
I wouldn't characterise Bitcoin mining as seignorage, since it also does the processing of transactions. The same way bank fees or differences in interest rates between loans and deposits aren't seignorage.
"Sure the US government makes a bit of money from printing dollars. "
Not really. They make it ctrl-p dollars, printing currency is expensive :)
The main way the US makes money is petro-dollars. Hence my "magic checkbook" comment. The US issues dollars, and then requires that everyone hold them, in order to trade oil. Thus they never get redeemed, so you can keep on writing cheques on the basis that no-one is going to cash them, just pass them around.
If a country starts bucking this, then they are in for a spot of regime change, or if to big, then sanctions.
"Crypto currency is just fiat money with nobody in control. "
That's a contradiction. Fiat requires an issuer and controller, as yourself has specified several times in this discussion. The issuer can vary the rate of issue, and the controller can impose rules on the currency.
Depending on the crypto in question, some are certainly fiat (devs in charge), some are flat (like BTC) and some are a mix (masternodes). If the devs can issue more coins, at whim, without any restrictions then it's essentially fiat. If the rate of issuance is impossible to change, then it's essentially a flat currency. Flat doesn't require anyone being in charge.
"But the Eurozone was saved by it."
What? Nah bro :) Greece could have (and can) go to the wall and it should have little to no economic effect on the rest of the Eurozone. It was politically untenable, sure, but the same applies to the acceptance of amazing works of fiction known as the Greek public finances. The other EU governments took on the Greek debt (banks forced to buy out retail bond holders, then haircut on bonds, then governments bought out the banks' bonds) rather than allow Greece to leave the Euro.
It was a political move, in part to stop a precedent and then having Spain or Italy trying it, which could potentially wreck the Eurozone, and partly because there's a strong resistance to central control of the Euro by increasing the power of the ECB.
There are problems with all forms of currencies. The biggest one (IMHO) for fiat is that it's controlled by unelected central bankers who are incompetent (see various financial crises), corrupt (ditto) and unaccountable.