Let it be done

What Fiat Cars Can Teach Us About Fiat Money

Let it be done: What Fiat Cars Can Teach Us About Fiat Money

Spoiler: They’re not related—but the metaphor works beautifully.

You’ve probably seen a Fiat 500 zipping down the street—small, stylish, undeniably European. But have you ever thought about what “Fiat” really means?

And more importantly…

What does a Fiat car have to do with fiat money?

It’s a fun question because while they come from completely different worlds—one automotive, one economic—they intersect in a surprisingly useful way.

Let’s take a drive through that connection.

🚗 What Is Fiat (the Car)?

Fiat is short for Fabbrica Italiana Automobili Torino, or “Italian Automobile Factory of Turin.” The brand dates back to 1899, and if you’ve ever driven one, you know they’re designed for maneuvering tight European streets with a little style and flair.

It’s a car. With an engine. Wheels. You hit the gas—it moves.

But if fiat money worked the same way as a Fiat car, here’s what would happen:

You get in, press the start button, and the engine doesn’t work…

But everyone around you agrees it’s driving.

💵 What Is Fiat Money?

The word fiat comes from Latin and means “let it be done” or “by decree.”

So when we say “fiat money,” we mean:

Money that exists—and holds value—because a government says so.

Let’s break it down with some examples.

🪙 1. Commodity Money (The Old Way)

Back in the day, people used things like gold, silver, or even salt as money. These were called commodity money because the material itself had value.

You could melt down a gold coin and it’d still be worth something.

This kind of money is heavy, hard to transport, and not super flexible when it comes to managing a national economy.

💵 2. Fiat Money (The Now Way)

Today, the $20 bill in your wallet doesn’t have any gold behind it. It’s just paper.

But you can use it to buy groceries. Pay rent. Tip your barista.

Why? Because the government has declared it to be legal tender, and everyone else agrees to play along.

That’s fiat money:

Valuable not because of what it is, but because of what we believe it to be.

🔧 Let’s Bring It Back to Fiat Cars

Here’s where the metaphor gets fun.

Imagine walking into a Fiat dealership and saying:

“I’ll take that Fiat 500, please. I’ll pay with ten goats.”

You’d probably be laughed out of the showroom. But once upon a time, that was the barter system. Goods for goods. Goats for grain. Fish for firewood.

Eventually, people realized carrying goats around was inefficient. So we started using coins, then paper money, and eventually credit cards and digital currency.

But what makes money today actually work?

It’s not physical value. It’s trust.

If Fiat cars ran on the same principle as fiat money, it would go like this:

• The car doesn’t have an engine.

• It doesn’t even move.

• But everyone around agrees: “Yep, that’s a car. It’ll get you where you need to go.”

That’s how fiat money operates.

It works because we believe it works.

Why Do Governments Use Fiat Money?