> What makes dollars valuable is that the government wants them back. Very common misconception. Dollars have value because there is demand for them (governments, other governments, other people and institutions). Bitcoin also has value because there is demand for it. As does your house, expensive art, etc. Why does anything have value? Because someone else will pay your for it. I can say my pencil is worth $1 billio…
My model of fiat money is like a battery: the government is both the outgoing pole (money printing) and the incoming pole (taxation). Money flows through the economy from one pole to the other, but all demand terminally stems from the taxation pole just as all supply stems from the printing pole.
Of course, things get more complicated because money exists across time, credit, and inflation. But as a simple model it explains why, for example, money tends to get devalued when it stops being accepted as tax. Just as a circuit stops flowing when you disconnect either pole.