There are many theories as to why money was created, not least that it serves a purpose as stored value which allows wealth to be accumulated from year-to-year unlike the first commodities, agriculture produce. This of course has allowed man to prosper through trade and investment.
But this first money was based on something of value, gold and silver. Then since the creation of government central banks, money has just been based on the word of governments that they would make good on the value of the paper that money was printed on. Which brings us to the other theory of why money was created: so that the State can tax it.
So of course the government doesnt allow private competition against its money monopoly. Keynes knew that the tendency was for government to overspend and inflate its way out of debt instead of actually be responsible. This has lead to the government, and just recently, to crack down on private money competitors.
One family just had their rare (eg commodity-backed) money confiscated by Uncle Sam, and those in the Liberty Dollar movement have an uphill battle. I used to think that government money was more efficient than private money could be. But given these crackdowns it makes me reconsider what is the real picture.