system
Given the following post, respond as if you're commenting on Reddit:
human
How does a new currency get introduced into a society? Think the American Dollar in the 1800's?

How does it get value? How is its value determined? How much is decided to print off? Does the government just have free money basically that they can spend anywhere?
gpt
There are a lot of economic papers regarding endogenous currency creation, they tend to be very mathematical and quite impenetrable, but they generally trace back to one paper by Kiyotaki & Wright (1989). In general, they created a model which demonstrated that in an economy characterised by the barter exchange of multiple goods, the good which is most frequently traded ends up being the good that other goods are denominated in - i.e. it becomes currency. This is based on what we call a "search theoretic" model, and is basically built on minimising costs of exchange.

From there, economists realised that the single most traded good in any regulated economy was actually tax credits. Since every trade effectively generated tax, everybody needed to ensure they had a good which would be accepted by the government in lieu of tax. In fact, this could be any good; which meant that anything the government declared as useable to pay tax would automatically be viable as money.