Fiat Meaning: Here’s What It Means and How to Use It

Words can be easily misheard or misused. Many words go through phases or periods where they were heavily used, but the usage of certain words can die down over time. 

A word commonly used centuries ago can be seen sparsely today. Today, the word in question is fiat — and nope, we’re not talking about the iconic Italian automobile. 

What Is the Definition of Fiat? 

According to the Collins Dictionary, a fiat (ˈfi·at) is an arbitrary order given by a person of power or authority; it’s considered an official order. Fiat is a noun, and its plural is fiats. 

Essentially, fiat means to make (or give) an order. A person of authority gives these orders to someone of a lower ranking. According to the Cambridge Dictionary, the person giving the orders has complete authority.

Fiat is a versatile word and can be used in an array of sentences. It can even refer to a few different things — don’t worry, we have plenty of examples below. 

What Is the Origin of Fiat? 

The word fiat originated in medieval Latin, and it was a 3rd singular present subjunctive of fierī, meaning “let it be done.” This Latin word is ancient, and the translation appears in the book of Genesis. 

In Genesis, God proclaims, “Let there be light.” This traditional usage of the word gave it a biblical allusion and was used in early 1500s literature in a biblical or religious context. A poem written by John Donne states that “unless God says another fiat,” there will be darkness. 

The word didn’t evolve into an authoritative decree until 1630. It explained people of power (such as the royal family or clergy) giving orders. By the 19th century, this word took on a different meaning as the word fiat currency was born. The word fiat’s usage peaked in the 1840s.

What Is Fiat Money and Fiat Currency? 

Fiat money refers to currencies like the U.S. Dollar, the Euro, and other major worldwide denominations. Even though dollar bills are not referred to as government fiat or fiat money and are explained as American currency or dollar bills, they are technically fiat currency. The U.S. dollar is both legal tender and fiat currency, which can be used for public or private debts. 

Fiat currency a government-issued currency with no real or natural value — this excludes gold, silver, diamond, and other physical items. The value of a fiat currency is dependent on the stability of the government issuing the currency. The supply and demand also plays a part in the value. The value of gold can fluctuate depending on the value of the fiat currency; this is called the gold standard.  

Since the value of fiat currency is decided by supply and demand, this gives central banks power over the economy as they decide how much money is printed. It’s not uncommon for countries to over-print their currency causing hyperinflation, causing interest rates to skyrocket. Hyperinflation can cause catastrophic economic issues like recessions. The federal reserve is meant to monitor the financial system to help ensure a healthy economy. 

An example of fiat currency was when the government decided to remove the usage of using real gold and silver coins as currency and began using a currency like paper money. 

Paper bills have no intrinsic value. Another example would be bitcoin, crypto, or cryptocurrency; bitcoin is a completely digital (or virtual) type of currency. It has no value outside of the digital cryptocurrency world. 

What Is the Difference Between Fiat the Word and Fiat the Car?

If you began this article thinking you would be learning about the small Italian automobile, The Fiat, we might have surprised you. Yes, fiat can have a few different meanings. 

We’re sure the more you learn about the word fiat, the more you’re wondering how and why the automobile gained its legendary name — well, we’re going to explain. 

The Fiat used for the Italian car is an acronym for Fabbrica Italiana Automobili Torino. But that’s not to say it’s not also a nod to the powerful word fiat. The fiat was created in the early 1900s when the Italian entrepreneur Giovanni Agnelli opened its first fiat factory in Turin, Italy. Despite the factory being small, Agnelli saw great success with the Fiat in his home country of Italy and later opened a factory in the U.S. in 1908. Since then, the Fiat has been a popular car amongst Italians and Americans alike.

Fiat saw a dip in sales from its American customers and closed all factories in the 1980s. It wasn’t until 2011 that Fiat decided to reopen its doors in the U.S. 

When Can You Use the Word Fiat? 

The word fiat can be used in many ways. Yes, it isn’t used as commonly today as it once was, but that’s not to say you can’t bring it back! Having a broad vocabulary is impressive — you should show off your knowledge. 

Here are some example sentences on ways you can use with fiat:

The dictator rules his country by fiat and wants everyone to obey his orders.

If citizens don’t monitor the government, they could be easily controlled by the fiat of a small group of dictators. 

There was an issue with parking space at the restaurant, so the restaurant manager issued a fiat demanding employees not park their vehicles in the customer parking area. 

The principal’s latest fiat prohibits the wearing of bandanas or short dresses on campus or at any school-related events. 

The students were appalled when they heard about the principal’s latest fiat, especially the girl students, as they felt singled out by his actions. 

The public was infuriated when they heard about the president issuing a fiat giving a long-time friend a pardon.

As a liberal, I fear that some of our rights could be stripped away from us by ministerial fiat. 

The Takeaway 

Fiat may have packed a bigger punch than you were expecting, but that’s what makes learning new words so fun —- you never know what you’re going to discover!

Sources:

Fiat definition and meaning | Collins English Dictionary

FIAT | definition in the Cambridge English Dictionary

Fiat money: Currencies that derive their value largely through trust in the governments that issue them | Business Insider