I would like to just clear some things regarding words and definitions. Anyone can use google or a dictionary to do research. Wikipedia contains a lot of good information. That way you can get your facts straight.
First, kinds of money.
. The value comes from the commodity it is made from. Barley, cigarettes, salt, tea, gold, silver.
. Represents something of value. E.g. Gold Certificates or Silver Certificates. Silver Certificates have written on them: "THIS CERTIFIES THAT THERE IS ON DEPOSIT IN THE TREASURY OF THE UNITED STATES OF AMERICA ONE DOLLAR IN SILVER PAYABLE TO THE BEARER ON DEMAND". Read it on the certificate:
. A currency without intrinsic value that has been established as money, often by government regulation.
Fiat in Latin means "Let it be done". And God said, "Fiat Lux," and there was light. In English, "fiat" just means a decree by some authority, like the government. It is not a derogatory term. It just means the powers-that-be decreed it.
. A medium of payment recognized by a legal system to be valid for meeting a financial obligation. Federal Reserve Notes are legal tender and have the words "This note is legal tender for all debts public and private." Read it on the one dollar note:
Basically Legal tender means that you can use it to pay your taxes, which is a huge part of what makes the dollar valuable. Everyone has to pay taxes in dollars, so everyone needs to get the hands on dollars. There is a huge demand for dollars.
De facto currency
. Money that is not legal tender in a country but is treated as such by most of the populace. Many countries have their own offical currency that no one trusts. The U.S. Dollar is the de facto currency. When someone goes to buy a $3,000 used car, they will not pay in the local currency, bongo bucks, but in U.S. $100 bills. "Show me the Benjamins."
. Foreign currency held in significant quantities by central banks as part of their foreign exchange reserves. The U.S. Dollar is the number one reserve currency in the world, held by many Central Banks.
Full Faith and Credit
of the United States. Applies to bonds and other debt instruments. it is the unconditional guarantee that the principle and interest will be paid. E.g. certain agency bonds like GNMA bonds are backed by the Full Faith and Credit of the United States. It makes the bonds risk free, because the lender knows he will be paid.
There is also a Full Faith and Credit Clause
in the Constitution, but that has to do with states respecting the laws of other states. I can not find anything official that applies the term "Full Faith and Credit" to currency.
Sic transit gloria mundi. [STGM]