The meaning of “swag” as “treasure” or “free giveaways” and the meaning of the word “swagger” clearly go back a long way. I suspect that sometime fairly recently (perhaps in the 1990’s or 2000’s), the word “swag” began being used by a youth culture in the U.S. Where they took this term from I can’t say. Perhaps it comes from the way a cool person swaggers as they walk or perhaps it means that an item is to be treasured. I’ve never heard this meaning before, so whatever culture uses it is clearly much younger than me (and maybe in some region I don’t visit).
It appears that this term became so common among this youth culture that some members of this culture became sick of it and made up a joke etymology for it.
