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It's probably a question of definition, but if you exchange cattle, tobacco or gold you are not using "money". I would argue that money is an IOU, a promise of

It's probably a question of definition, but if you exchange cattle, tobacco or gold you are not using "money". I would argue that money is an IOU, a promise of something that can be used generally, not only between the two initial parties (that would be a contract). What would be the point of calling 'money' to cattle? "That form of "money" has been happening for thousands of years. " Can you give me some examples? because I have read about it and it seems that it's not the case. At least, not in very relevant contexts. '[..] people will fall back on underground "organic money".' Actually they start using currency of other states. And it's not a "faith" thing, it's related to a real loss of value of the currency caused, in the cases that you mention, for supply shocks in the country (see http://bilbo.economicoutlook.net/blog/?p=3773 http://bilbo.economicoutlook.net/blog/?p=3773 ).

sigil 10y ago
> "That form of "money" has been happening for thousands of years. " > Can you give me some examples? Nick Szabo has a great history of money paper, "Shelling Out: The Origins of Money" with some examples. http://nakamotoinstitute.org/shelling-out/ http://nakamotoinstitute.org/shelling-out/
- RobertoG 10y ago
  Thanks for that, it seems interesting. I will read it.
nickik 10y ago
A gold coin can be money, a bank circulating a IOU that allows withdrawal from bank of one gold coin is called fiduciary media. The underlying money is still gold not the note.
- RobertoG 10y ago
  Precisely, my point is that an a IOU is a promise, it's not the promised thing (never mind if the promised thing is gold or a cow), and that it's what distinguish money from a real asset.
  - nickik 10y ago
    And that what I'm saying is wrong. The gold coin is the money. Also you can not disassociate the IOU from the underlying object, it binds the IOU.
- digi_owl 10y ago
  The gold coin would be gold first, coin later. What makes it a coin is that someone measured its purity, and stamped it with their mark to underwrite said purity. The IOU, if not attached to a specific name, is just as good and exchange medium as that coin. Even better perhaps because the value is not in the material itself, but in what it can be exchanged for. Frankly gold is nothing magical, it is just a material that is very corrosion resistant. Thus making weights out of gold would allow them to stay accurate longer while being transported around.
  - nickik 10y ago
    Of course gold is not magical, I don't clam it is. The coin form is just for exchange, gold itself is the base money. > The IOU, if not attached to a specific name, is just as good and exchange medium as that coin. This is where you are wrong. Exchanging a IOU of a third party increases the trust relationship to a third party. That is useful to do, and that's why banking exists, but it is not inherent or required. > Even better perhaps because the value is not in the material itself, but in what it can be exchanged for. Yes. But again. It is still bound to the base money. Look into how historical note issuing banking system work, there are great resources on this. The banks exchange the gold when they get other notes. Then they further abstract and establish clearing houses that do multiparty exchange. Note here that the relationship always grow complex and more trust is involved, but it is all based on the soundness of the underlying base system. The IOUs, banking and all are simple not required for something to be money.
  - clock_tower 10y ago
    The note's not going to be "as good as gold" unless it comes from a seriously reliable lender. You have to be confident that the lender exists, and that he'll pay out in good coin when you present the note; you also have to take into account the trouble of getting to the bank from where you are (which means, in practice, trading the note for a note from abroad drawn on a local bank), so paper from Venice is going to circulate below par in Hamburg and vice-versa. (It probably won't even be accepted in the countryside, where access to clearinghouses is almost nonexistent.) Paper from remote areas is basically worthless even in centers of civilization, likelier than not to be a scam; compare the later American "wildcat banks" (https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking). Fernand Braudel has some wonderful books on this subject -- the second and third volumes of Civilization and Capitalism (the storied Structures of Everyday Life is the first), plus his book on the Mediterranean in the age of Philip II.
marcosdumay 10y ago
If everybody accepts exchange goods for cattle, expecting to exchange those cattle back into something they want later, then cattle is money. If people exchange goods for cattle just because they want some meat, than it's not money.
dragonwriter 10y ago
> It's probably a question of definition, but if you exchange cattle, tobacco or gold you are not using "money". If it is used as a unit of account and a medium of exchange, then those things (as much as gold and silver coins) are certainly money.
xixi77 10y ago
Regarding the link: there are many countries that went through sharp supply shocks and didn't experience hyperinflation. Hyperinflation is not the result of a supply shock; it is a result of a particular method of dealing with that shock (that is, raising the revenue through printing money aka segniorage taxation) getting out of hand. Printing money is not by itself "evil" except in the eyes of several internet libertarians, and there is a reason it has been so popular: it is the easiest way to raise some money fast. It will always result in inflation, that's how it is paid. If the sovereign is sensible, that could also be how it ends. Hyperinflation is quite another matter though: it is destructive to everyone, it is always a result of bad policy (that is, pushing segniorage beyond its' limits), and when and how it kicks in depends exactly on faith.
clock_tower 10y ago
What about cowries, widely used as currency in the Indian Ocean littoral (https://en.wikipedia.org/wiki/Shell_money https://en.wikipedia.org/wiki/Shell_money)? Or fur as money in Siberia? There was even the use of standard lengths of Indian cotton cloth in the slave trade; "a piece of India" at first meant a length of cloth which could be bartered for a male slave 16-45 years old, then came to mean a slave himself.

sigil 10y ago

> "That form of "money" has been happening for thousands of years. " > Can you give me some examples? Nick Szabo has a great history of money paper, "Shelling Out: The Origins of Money" with some examples. http://nakamotoinstitute.org/shelling-out/ http://nakamotoinstitute.org/shelling-out/

RobertoG 10y ago
Thanks for that, it seems interesting. I will read it.

nickik 10y ago

A gold coin can be money, a bank circulating a IOU that allows withdrawal from bank of one gold coin is called fiduciary media. The underlying money is still gold not the note.

RobertoG 10y ago
Precisely, my point is that an a IOU is a promise, it's not the promised thing (never mind if the promised thing is gold or a cow), and that it's what distinguish money from a real asset.
- nickik 10y ago
  And that what I'm saying is wrong. The gold coin is the money. Also you can not disassociate the IOU from the underlying object, it binds the IOU.
digi_owl 10y ago
The gold coin would be gold first, coin later. What makes it a coin is that someone measured its purity, and stamped it with their mark to underwrite said purity. The IOU, if not attached to a specific name, is just as good and exchange medium as that coin. Even better perhaps because the value is not in the material itself, but in what it can be exchanged for. Frankly gold is nothing magical, it is just a material that is very corrosion resistant. Thus making weights out of gold would allow them to stay accurate longer while being transported around.
- nickik 10y ago
  Of course gold is not magical, I don't clam it is. The coin form is just for exchange, gold itself is the base money. > The IOU, if not attached to a specific name, is just as good and exchange medium as that coin. This is where you are wrong. Exchanging a IOU of a third party increases the trust relationship to a third party. That is useful to do, and that's why banking exists, but it is not inherent or required. > Even better perhaps because the value is not in the material itself, but in what it can be exchanged for. Yes. But again. It is still bound to the base money. Look into how historical note issuing banking system work, there are great resources on this. The banks exchange the gold when they get other notes. Then they further abstract and establish clearing houses that do multiparty exchange. Note here that the relationship always grow complex and more trust is involved, but it is all based on the soundness of the underlying base system. The IOUs, banking and all are simple not required for something to be money.
- clock_tower 10y ago
  The note's not going to be "as good as gold" unless it comes from a seriously reliable lender. You have to be confident that the lender exists, and that he'll pay out in good coin when you present the note; you also have to take into account the trouble of getting to the bank from where you are (which means, in practice, trading the note for a note from abroad drawn on a local bank), so paper from Venice is going to circulate below par in Hamburg and vice-versa. (It probably won't even be accepted in the countryside, where access to clearinghouses is almost nonexistent.) Paper from remote areas is basically worthless even in centers of civilization, likelier than not to be a scam; compare the later American "wildcat banks" (https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking). Fernand Braudel has some wonderful books on this subject -- the second and third volumes of Civilization and Capitalism (the storied Structures of Everyday Life is the first), plus his book on the Mediterranean in the age of Philip II.

marcosdumay 10y ago

If everybody accepts exchange goods for cattle, expecting to exchange those cattle back into something they want later, then cattle is money. If people exchange goods for cattle just because they want some meat, than it's not money.

dragonwriter 10y ago

> It's probably a question of definition, but if you exchange cattle, tobacco or gold you are not using "money". If it is used as a unit of account and a medium of exchange, then those things (as much as gold and silver coins) are certainly money.

xixi77 10y ago

Regarding the link: there are many countries that went through sharp supply shocks and didn't experience hyperinflation. Hyperinflation is not the result of a supply shock; it is a result of a particular method of dealing with that shock (that is, raising the revenue through printing money aka segniorage taxation) getting out of hand. Printing money is not by itself "evil" except in the eyes of several internet libertarians, and there is a reason it has been so popular: it is the easiest way to raise some money fast. It will always result in inflation, that's how it is paid. If the sovereign is sensible, that could also be how it ends. Hyperinflation is quite another matter though: it is destructive to everyone, it is always a result of bad policy (that is, pushing segniorage beyond its' limits), and when and how it kicks in depends exactly on faith.

clock_tower 10y ago

What about cowries, widely used as currency in the Indian Ocean littoral (https://en.wikipedia.org/wiki/Shell_money https://en.wikipedia.org/wiki/Shell_money)? Or fur as money in Siberia? There was even the use of standard lengths of Indian cotton cloth in the slave trade; "a piece of India" at first meant a length of cloth which could be bartered for a male slave 16-45 years old, then came to mean a slave himself.