{"id":5873,"date":"2015-02-22T09:10:19","date_gmt":"2015-02-22T14:10:19","guid":{"rendered":"http:\/\/olduvai.ca\/?p=5873"},"modified":"2015-02-22T09:10:19","modified_gmt":"2015-02-22T14:10:19","slug":"why-does-fiat-money-seemingly-work","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=5873","title":{"rendered":"Why Does Fiat Money Seemingly Work?"},"content":{"rendered":"<h3 class=\"art-postheader\"><a title=\"Permanent Link to Why Does Fiat Money Seemingly Work?\" href=\"http:\/\/www.acting-man.com\/?p=35965\" rel=\"bookmark\">Why Does Fiat Money Seemingly Work?<\/a><\/h3>\n<h3><strong>Introducing Money<\/strong><\/h3>\n<p>Imagine three men living on a small island. Toni is mining the local salt mine, and apart from him there are Pete the fisherman and Tom the apple grower and their families. They have a barter trading system set up: Toni exchanges his salt for Pete\u2019s fishes and Tom\u2019s apples, who in turn exchange fishes and apples between each other.<\/p>\n<p>One day Pete says: \u201cI have an idea. Instead of fish, I will from now on give you pieces of papyrus with numbers marked on them\u201d. Papyrus grows in great quantities nearby, but has so far not been of practical use to any of the islanders. Pete continues: \u201cOne papyrus mark will represent 1 fish or 5 apples or 2 bags of salt (equivalent to current barter exchange rates). This will make it easier for us to trade among ourselves. We won\u2019t have to lug fishes, apples and salt around all the time. Instead, we can simply present the pieces of papyrus to each other for exchange on demand.\u201d<\/p>\n<p>In short, Pete wants to modernize their little island economy by introducing money \u2013 and he already has one of those new papyrus notes with him, which he is eager to trade for salt. However, the others would immediately realize that there is a problem: the papyrus\u00a0<em>per se<\/em>\u00a0is not of any value, since none of them have found a use for it as yet. If they were all to agree on using the papyrus as a medium of exchange, its value would rest on a promise alone \u2013 Pete\u2019s promise that any papyrus he issues will actually be \u201cbacked\u201d by fish, which would make Toni and Tom willing to accept it in exchange for salt and apples.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why Does Fiat Money Seemingly Work? Introducing Money Imagine three men living on a small island. Toni is mining the local salt mine, and apart from him there are Pete the fisherman and Tom the apple grower and their families. They have a barter trading system set up: Toni exchanges his salt for Pete\u2019s fishes [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[951,3677,309,2022,3676,536,3675,805],"class_list":["post-5873","post","type-post","status-publish","format-standard","hentry","category-economics","tag-currency","tag-exchange","tag-fiat-currency","tag-fx","tag-john-law","tag-money","tag-money-history","tag-trade"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5873","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5873"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5873\/revisions"}],"predecessor-version":[{"id":5874,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5873\/revisions\/5874"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5873"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5873"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5873"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}