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My understanding is that these were used as what we currently refer to as treasuries. I.e., debt that the government owes to an investor. So, if you want to len
by hristov 6y ago
My understanding is that these were used as what we currently refer to as treasuries. I.e., debt that the government owes to an investor. So, if you want to lend the government some money, you get half a piece of wood with some notches indicating how much you lent. Then when it is time to collect you go to the government show them your piece of wood and if it matches you get your money plus whatever interest.
So if they do not match the government simply does not give you your money.
- krisoft 6y agoSo it is in the best interest of the government to get a rasp and file some of of their side of the block. Nothing will match and thus they don’t have to pay.
- batpangolin 6y agoIf the government wants to default on its debts it can generally just do so. People lend money to the government because they choose to trust it for various reasons. If the government decided to say tomorrow that $100 bills with serial numbers AB1234567000-AB12334567999 were counterfeit and should not be accepted, what do you think would stop them?
- thesuitonym 6y agoMaybe in the short term, but long term it's best for a government to pay off its debts. Who would lend money to the government if it was well known that they will never pay back?