These currencies derive their value not from any intrinsic physical worth, but from a combination of government decree (legal tender status) and collective trust and demand within an economy. Crucially, the ability of a central bank to issue more of this currency is what underpins its perceived stability. However, when a government or central bank possesses the unfettered power to print an "infinite amount" of its currency, this power becomes a double-edged sword.

The act of printing money, or more accurately, creating money electronically through quantitative easing or other monetary policy tools, increases the money supply. When the money supply increases dramatically and disproportionately to the growth in goods and services available in the economy, it leads to inflation. This means that each individual unit of currency can purchase fewer goods and services than it could before. In essence, the purchasing power of the currency erodes.