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> our exchange rate is $1000 per banana This implies that your boss is ready to trade both ways. I'd gladly accept the bundle of bananas.
by IMTDb 9y ago
> our exchange rate is $1000 per banana
This implies that your boss is ready to trade both ways. I'd gladly accept the bundle of bananas.
- deelowe 9y ago> This implies that your boss is ready to trade both ways. Again, this is the definition of currency. The root comes from Latin and means to "flow" or "run." It's this condition of "flowing" that defines currency. As I said before, this shared perspective of how well a currency "flows" is what defines it's value. Fiat or otherwise doesn't matter. In the strawman presented here, you (and maybe the rest of the company) accept and will participate in the exchange rate, so bananas have become a slightly stronger currency. For most of the world, it's still pretty terrible, but they are marginally better because at least some people accept it as currency. Unless we plan to go back to bartering, this same logic applies for all forms of currency. There's nothing special about gold, bitcoins, rectangular plastic cards, or green sheets of paper with dead people's faces printed on them. What gives these things value is simply society's willingness to use these as a means of conducting transactions.
- TylerE 9y agoI would _mostly_ agree, but gold is actually a bad example as it has quite a bit on intrinsic value due to it's interesting metallurgical and electrical properties.