10 ms·

David Graeber talks at length about this in his Debt book. At various times in history "unit of account" and "means of settlement" have been two different thin

David Graeber talks at length about this in his Debt book. At various times in history "unit of account" and "means of settlement" have been two different things. We are used to having a single currency (INR/USD etc.,) perform both the roles; however that needn't be the case. Going back to the earliest times in Mesapatomia, the debt and payments were denominated in silver coins but the actual payment was done in kind (such as food grains, wood). Roman currency continued to be a widely used unit of account in the Middle Ages despite there being no Roman Empire producing the currencies/coins. Because a wide swathe of population had gotten used to that unit of account they just continued; though the payment was settled using whatever they had with them. Brazil used this phenomenon to their advantage to escape from a monetary hole[1]. They created a new currency purely as a unit of account i.e., they didn't print/issue them. Everything was denominated in this new currency so citizens got used to calculating everything in this stable new currency. And then they declared it as their official currency. I am fascinated by history of money and it's interesting to see a phenomenon play out again and again in different contexts. [1] https://www.npr.org/sections/money/2010/10/04/130329523/how-fake-money-saved-brazil https://www.npr.org/sections/money/2010/10/04/130329523/how-...

kqr 4y ago
And it only gets more fascinating the more you read about it. I remember Graeber also brought up the example of criminal fees somewhere in western Europe being measured in actual human women even until fairly recently. Maybe at some point did people actually settle damages by transacting in women, but the measurement lived for far longer than the practise. It was just well known how many pigs corresponded to a human woman, and how many grains corresponded to a pig. (This was something scholars studied and found agreement on.) Graeber speculates that this whole idea of precisely measuring what one person owes to another started with criminal codes, fueled by a deeply human sense of tit-for-tat. Only quickly people realised an actual, literal, eye-for-an-eye is impractical, and it's better to conduct the transaction in something other than the specified fee.
tsimionescu 4y ago
It's fascinating how persistent units of account can be. In Romania, after rampant inflation in the 90s, our currency had stabilized in the 00s at a point where a loaf of bread was something like 5-7000 ROL, while a typical salary was maybe 50M ROL. 1 EUR was maybe 35k ROL. The government then decided in 2005 to slash these extra zeroes, and replaced ROL with RON, at a fixed price of 1RON = 10k ROL. The funny thing is, people got used to the new values for small purchases, but for bigger sums, you still hear plenty of people discussing about things in terms of "hundreds of millions" (implying old ROL) instead of the newer values, 17 years later. This is true even though larger sums are also commonly denominated in euros, and it's easy to compute 100k euros = 500k RON. Still, many still go the extra step and say = 5 billion ROL. Note: both RON and ROL are named "leu/lei" in common usage, but I've used the currency symbols to make it clearer, and because I don't think most would know how to read "lei" (it's read like English "lay" ; for "leu" there's no equivalent, English doesn't have the "eu" diphtong). It's also funny, in the context of this article, that this is the Romanian word for Lion - so I could say my house is worth five hundred thousand lions! The actual etymology is based on a medieval Italian coin with a lion on one of its sides that was widely used in this region (don't remember from which Italian city-state).
- jaclaz 4y ago
  I think that the coin that originated the name was - for some reasons - Dutch, the Dutch thaler called Leeuwendaalder, and it was later, 16th or 17th century, though possibly the actual coins that were used in Romania were some similar Italian ones, in practice "fakes" made with a lower amount of silver: https://en.wikipedia.org/wiki/Romanian_leu#Etymology https://en.wikipedia.org/wiki/Romanian_leu#Etymology https://en.wikipedia.org/wiki/Thaler#Dutch_Republic https://en.wikipedia.org/wiki/Thaler#Dutch_Republic
  - tsimionescu 4y ago
    Oops, you're right about the etymology, I was just misremembering.
  - ChuckNorris89 4y ago
    Bulgarian currency (Lev) is also related to the lion https://en.wikipedia.org/wiki/Bulgarian_lev https://en.wikipedia.org/wiki/Bulgarian_lev
imtringued 4y ago
>Brazil used this phenomenon to their advantage to escape from a monetary hole[1]. ... And then they declared it as their official currency. You know, looking at their inflation rate (which is in the double digits), they should have kept that dual "currency" system and let people withdraw the inflationary currency as cash and keep the non inflationary currency in bank accounts with negative interest rates. Why? Because inflation is a lie, you think your money is safe because you don't see it wither away (you do feel it wither away, but by how much? nobody really knows), a negative interest rate is the raw honest and ugly truth.
DocTomoe 4y ago
See also: The relationship between Guineas and Pound Sterling in British auctions. Your bid is in Pound - but you pay in Guineas (which are worth 5% more) - the difference in worth is the auctioneer's fee. Of course, noone's paying in actual Guineas - those are too rare, and noone's carrying gold coins around. The Guinea value is being converted to Pound value - but the Pound value is the amount the former owner of the object to be sold will receive.
- devilbunny 4y ago
  5% is an insanely low auctioneer's fee. Is that for really high-ticket items only? The place I usually buy from in the US, it's 22%, and while that's on the high end, I don't think I've ever seen less than 15%. These are largely items in the $500-$5000 range, with a few in the $5-20k range and occasional big-ticket items going for a bit over $100k.
rmbyrro 4y ago
Brazil is a highly successful case for taming chronic inflationary processes. Printing money is a crime there nowadays (and similar creative financial operations). A head of state lost its office once for disrespecting it.

kqr 4y ago

And it only gets more fascinating the more you read about it. I remember Graeber also brought up the example of criminal fees somewhere in western Europe being measured in actual human women even until fairly recently. Maybe at some point did people actually settle damages by transacting in women, but the measurement lived for far longer than the practise. It was just well known how many pigs corresponded to a human woman, and how many grains corresponded to a pig. (This was something scholars studied and found agreement on.) Graeber speculates that this whole idea of precisely measuring what one person owes to another started with criminal codes, fueled by a deeply human sense of tit-for-tat. Only quickly people realised an actual, literal, eye-for-an-eye is impractical, and it's better to conduct the transaction in something other than the specified fee.

tsimionescu 4y ago

It's fascinating how persistent units of account can be. In Romania, after rampant inflation in the 90s, our currency had stabilized in the 00s at a point where a loaf of bread was something like 5-7000 ROL, while a typical salary was maybe 50M ROL. 1 EUR was maybe 35k ROL. The government then decided in 2005 to slash these extra zeroes, and replaced ROL with RON, at a fixed price of 1RON = 10k ROL. The funny thing is, people got used to the new values for small purchases, but for bigger sums, you still hear plenty of people discussing about things in terms of "hundreds of millions" (implying old ROL) instead of the newer values, 17 years later. This is true even though larger sums are also commonly denominated in euros, and it's easy to compute 100k euros = 500k RON. Still, many still go the extra step and say = 5 billion ROL. Note: both RON and ROL are named "leu/lei" in common usage, but I've used the currency symbols to make it clearer, and because I don't think most would know how to read "lei" (it's read like English "lay" ; for "leu" there's no equivalent, English doesn't have the "eu" diphtong). It's also funny, in the context of this article, that this is the Romanian word for Lion - so I could say my house is worth five hundred thousand lions! The actual etymology is based on a medieval Italian coin with a lion on one of its sides that was widely used in this region (don't remember from which Italian city-state).

jaclaz 4y ago
I think that the coin that originated the name was - for some reasons - Dutch, the Dutch thaler called Leeuwendaalder, and it was later, 16th or 17th century, though possibly the actual coins that were used in Romania were some similar Italian ones, in practice "fakes" made with a lower amount of silver: https://en.wikipedia.org/wiki/Romanian_leu#Etymology https://en.wikipedia.org/wiki/Romanian_leu#Etymology https://en.wikipedia.org/wiki/Thaler#Dutch_Republic https://en.wikipedia.org/wiki/Thaler#Dutch_Republic
- tsimionescu 4y ago
  Oops, you're right about the etymology, I was just misremembering.
- ChuckNorris89 4y ago
  Bulgarian currency (Lev) is also related to the lion https://en.wikipedia.org/wiki/Bulgarian_lev https://en.wikipedia.org/wiki/Bulgarian_lev

imtringued 4y ago

>Brazil used this phenomenon to their advantage to escape from a monetary hole[1]. ... And then they declared it as their official currency. You know, looking at their inflation rate (which is in the double digits), they should have kept that dual "currency" system and let people withdraw the inflationary currency as cash and keep the non inflationary currency in bank accounts with negative interest rates. Why? Because inflation is a lie, you think your money is safe because you don't see it wither away (you do feel it wither away, but by how much? nobody really knows), a negative interest rate is the raw honest and ugly truth.

DocTomoe 4y ago

See also: The relationship between Guineas and Pound Sterling in British auctions. Your bid is in Pound - but you pay in Guineas (which are worth 5% more) - the difference in worth is the auctioneer's fee. Of course, noone's paying in actual Guineas - those are too rare, and noone's carrying gold coins around. The Guinea value is being converted to Pound value - but the Pound value is the amount the former owner of the object to be sold will receive.

devilbunny 4y ago
5% is an insanely low auctioneer's fee. Is that for really high-ticket items only? The place I usually buy from in the US, it's 22%, and while that's on the high end, I don't think I've ever seen less than 15%. These are largely items in the $500-$5000 range, with a few in the $5-20k range and occasional big-ticket items going for a bit over $100k.

rmbyrro 4y ago

Brazil is a highly successful case for taming chronic inflationary processes. Printing money is a crime there nowadays (and similar creative financial operations). A head of state lost its office once for disrespecting it.