Veil of money describes a problem in economics, which centers around the question of whether money is a commodity like other commodities, such as oil or gold or food - or whether it has special properties.
This question arises in classical political economy, where Mill argues that money is unimportant, and that while money might disguise the true values in an economy, it would only do so for a limited period of time. This was used to argue against government intervention in political economy as a waste of time. The problem expanded however as money swung back toward credit based issuance of notes. What money meant, or was equivalent to, became important as governments were required to adjust interest rates in order to maintain the Gold Standard. 1922 U.S. gold certificate The gold standard is a monetary system in which the standard economic unit of account is a fixed weight of gold and currency issuers guarantee, under specified rules, to redeem notes in that amount of gold. ...
In the 20th century the veil of money is used to describe questions of stability and the exchangeability of money for interest or commodity in a macro-economic model. In essence, as long as money can be treated like a commodity, there is no stickiness between money and goods, or money and interest.
Fiat money or fiat currency, is money that is current or legal tender as satisfaction for money debts by government fiat, that is by law.
The word fiat when considered in the context of "fiat money" is generally considered to stem from the Latin for "let it be", although there is an alternative school of thought that believes the word to be a corruption of the past tense of the latin fidere which means "to trust".
This money combined aspects of fiat currency, in that there was limited convertibility, fractional reserve banking and a unit of account set by the government, with commodity based money, in that there were limits to the amount of money that could be put into circulation.
Money is one of the most central topics studied in economics and forms its most cogent link to finance.
It tends to exist in parallel with another form of money such as fiat money or commodity money, wherever banking-style loans are used, and occurs as a by-product of lending.
Bank savings are actually a kind of loans — savers loan their money to a bank at a low interest rate or merely in exchange for the benefit of convenience or its security (accepting that they lose a small amount of value to inflation).
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