  Why is ``worthless'' fiat money generally accepted as payment for goods and
services? In equilibrium theory, the value of money is generally not
determined: the number of equations is one less than the number of unknowns, so
only relative prices are determined. In the language of mathematics, the
equations are ``homogeneous of order one''. Using the language of physics, this
represents a continuous ``Goldstone'' symmetry. However, the continuous
symmetry is often broken by the dynamics of the system, thus fixing the value
of the otherwise undetermined variable. In economics, the value of money is a
strategic variable which each agent must determine at each transaction by
estimating the effect of future interactions with other agents. This idea is
illustrated by a simple network model of monopolistic vendors and buyers, with
bounded rationality. We submit that dynamical, spontaneous symmetry breaking is
the fundamental principle for fixing the value of money. Perhaps the continuous
symmetry representing the lack of restoring force is also the fundamental
reason for large fluctuations in stock markets.
