Brad brings up the subject when he talks a sudden reversal in term of trade. The Zimbabwe had no way to compute any estimate for the long term prospects for the nation, hence money become decoupled from the economy and one gets a currency crisis. Government will just print money to pay its bills.
It cannot happen in Britain, the nation is too dependent on the fiat. They love it, their government needs it, the cost and risk is too great to get a new fiat banker.
Monetarists believe that the utility of the government fiat and cost of replacement allows some dictatorial ability to suppress rates to fund government without benefit of democracy.
When a citizen does not have a fair vote, the government fiat contract is weak because the citizen feel unresponsible for the taxes charged and services rendered. So one gets a situation where the owner of the fiat bank have no interest in its care and feeding. Aymmetric motivations about government debt and risk goes way up and the long term is uncertain.
Does the USA suffer this? Will we suffer a currency crisis? Absolutely, and soon than later. As long as undemocracy rules in DC, the currency is at risk. The 30 Hoovers cannot survive without a government owned fiat in DC. But the long term survival of the Hoovers increasing depends upon excessive taxation of Texas and California. Texas is not nearly as committed to the fiat as the Hoovers. California is not stable enough to have its own currency. California will pay a high fee for using the fiat in DC. Unlike Texas, California has no future without DC.
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