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Or the Saudis could directly trade oil for wheat.  

Currencies make it a damn sight easier to trade but they aren't necessary for trade.

by ATinNM on Sat Jul 17th, 2010 at 11:25:18 PM EST
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But almost all of the relationships that compose the institutional framework necessary for transcontinental trade involve large numbers of relationships that make reference to currency. Re-casting those relationships in terms that obviate the need for currencies will often involve renegotiating the entire relationship. Do this to a large enough fraction (in a short enough span of time) of the relationships that make up the institutional framework necessary for trade and that entire institutional framework risks going belly-up.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jul 18th, 2010 at 09:34:02 AM EST
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