The below quotation is either an imprecise translation from German, or an imprecise statement, or both. In fact, it is at best only partly true as well as fundamentally wrong.
The fundamental source of demand for government-approved currencies are the debts invented by a government. A government invents various debts and then dictates what form of payment will be accepted to pay the debts (tax debts and fines and fees and so on).
The more debts (costs) that a government imposes on their source of wealth, the more demand there will be for the government approved Currency. For example, if a government raised sales tax rate from 5% to 15%, that would produce no change in the amount of currency in circulation and a massive increase in demand for that fixed amount of currency.
Likewise, if a government had a payroll tax that swallowed 15% of all wages and salaries paid within their jurisdiction, then reduced that payroll tax rate to only 5%, that would immediately produce an increase in the take-home pay of all employees (and reduce the costs of the business as well, since businesses draw from their cash reserves to pay payroll taxes).
there would be no change in the actual total amount of currency in circulation, yet a significant increase in the cash reserves of every business and every employee within the jurisdiction of that government. In other words, the coerced demand for currency would decline. When demand for something Falls, the purchasing Power of that thing falls. When purchasing power for a currency falls, prices rise. (Prices are just exchange rates.)
So, if we review the history of the United States, we can find periods in which there was a gold standard for currency, a bimetallic standard of both gold and silver, and a silver standard. Whenever a government implements a metallic standard or backing for a currency, that by default create an increase in the natural demand for that substance.
For instance, in the 1950s, the US treasury was minting pennies with a certain percentage of copper in the coin. Later, the government reduced the amount of copper in that coin.
that policy change had virtually no effect on the purchasing power of the penny, which was not DERIVED from the amount of copper in the coin. The purchasing power of the penny was derived from the debts invented by the government and imposed on the public (which could be discharged in government currency, such as nickels and dimes and pennies).
However, total market demand for copper did decline (slightly) when the US government reduced the percentage of copper used in a penny. The government stopped buying so much copper to mint in to pennies (plus they eventually reduced the total volume of pennies in circulation relative to dimes and quarters).
Whether a coin contains copper or gold or silver, the face value SET by the government determines purchasing power, not the metal in the coin. If a paper currency contains paper fibers, it is the magic shapes of ink on the paper that alter purchasing power.
What is the basis of those magic shapes of ink on THAT paper having social influence? I cannot just add a few zeroes to a $1 bill and make it a $100 bill, right?
The military capacity of the government is the foundation. The reason that people pay taxes is because of the threat of government soldiers (deputies, cops, etc) coming to arrest or evict or garnish based on non-payment of debts invented by governments.
Why does a confederate dollar bill no longer accepted at the grocery store (or even a farmer’s market)? because there is no military regime forcing people to pay taxes in that currency.