Why do a government need fiscal policy?

Question

Why do a government need fiscal policy?

In: Economics

Answer 1

It is also needed to maintain a currency. Most countries use a Fiat system where money is essentially worthless, but is backed up by faith in the government and the central bank. This is different from a commodity money system where money has intrinsic value (gold or silver coins) or a representative money system where money is backed up by a commodity (1 paper note equals 1 amount of gold or silver).
If the government has poor fiscal policy people stop believing in the currency and hyperinflation occurs. A good example of this is post WW1 Germany and more recently Zimbabwe.