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Cheese-eating surrender monkeys Open Thread | 39 comments (39 topical, editorial, 0 hidden)
Re: "Currency board linked to gold" (4.00 / 2)
I watched a programme this evening, "Tribes" by David Attenborough (I think you'd enjoy it), in which I watched a group of Solomon Islanders make shell money.  They were the only people who made this money, which involved finding certain shells and then working them to a round and very smooth finish and drilling a hole through them; the one tribe were the only ones to make this money, but it was used widely--by many other tribes.  In the film the two uses shown were: a brides dowry, where huge chains of these small worked shells were hung up in preparation for their transfer to the brides new husband; and as a welcoming present for David Attenborough, symbolic in this case.

So I think there are two elements (maybe!) for a currency to have intrinsic value (where you'd keep it just because you wanted to, rather than "transactional", where your only plan is to replace it with something more immediately valuable):

  1. Human labour producing something of obvious and basic value: just one example: gold is considered beautiful by humans; it does not tarnish and does not rot.  (Ditto the polished shells, though they may be easier to break--but there were a lot of them!  And shell is tough!)

  2. A scarcity value implied by this need for humans to "work to produce the money"...hmmm...

You can't spend gold at the supermarket, but if you have a bar of it, or some coins at home, or in your pocket, you have a lot of "money"--it is still valuable, and its uses keep growing, I suppose (I'm thinking electronics, but I'm sure it has many applications.)

Don't fight forces, use them R. Buckminster Fuller.
by rg (leopold dot lepster at google mail dot com) on Fri Nov 9th, 2007 at 08:15:14 PM EST
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Re: "Currency board linked to gold" (none / 1)
I watched a programme this evening, "Tribes" by David Attenborough (I think you'd enjoy it), in which I watched a group of Solomon Islanders make shell money.

you're right, i think i would very much like that program.

how amazing -- and disturbing -- that one tribe has the monopoly on producing these shells for use as currency among other tribes.  effectively, they are like a dowry (or is that cowry?) shell central bank!

did the program suggest any other kind of such division of labor among the tribes, e.g. one tribe focusing on making baskets, another tribe on fishing hooks, etc.?

on the question of what makes a good "medium of exchange", Wikipedia cites:

  1. transportability
   2. divisibility
   3. high market value in relation to volume and weight
   4. recognizability
   5. resistance to counterfeiting

To serve as a medium of exchange, a good or signal need not have any inherent value of its own, that is, it need not be effective as a store of value in itself. Paper money is a useful medium of exchange in part because it has no such value, thus, it cannot lose that value if damaged, and so damaged paper money is easily replaced. Gold was long popular as a medium of exchange and store of value because it was convenient to move large quantities and was inert, and so would not tarnish or lose weight or value.

But in the age of electronic money, haven't we moved beyond such physical concerns?

And while I don't think water is traded as a commodity yet, and much less am advocating that, it occurs to me that if I could know what the price of a liter of drinking water on the international markets is, that would give me a very different kind of information of what my holdings in RMB, euros, pesos, yen, baht, dollars, etc. are "worth" (as opposed to the sort of information that knowing what the price of gold internationally gives me.)

But rather than talk about water as a medium exchange, what about using it as the basis for a currency peg?  The author of this article seems to think pegging the dollar back to gold would be a good idea.  Supposing that pegging currency to a commodity could be a good idea at all, I simply wonder why it wouldn't be more reasonable to use a commodity that in and of itself has direct and obvious value to people, or at least to human society, something like water, or energy.

Truth unfolds in time through a communal process.

by marco on Fri Nov 9th, 2007 at 09:31:52 PM EST
[ Parent ]
Re: "Currency board linked to gold" (none / 0)
I suppose then it could literally "rain money" ;)

Don't fight forces, use them R. Buckminster Fuller.
by rg (leopold dot lepster at google mail dot com) on Sat Nov 10th, 2007 at 05:52:15 AM EST
[ Parent ]

Cheese-eating surrender monkeys Open Thread | 39 comments (39 topical, 0 editorial, 0 hidden)
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