WEBVTT - How Currency Works 0:00:01.200 --> 0:00:04.640 Welcome to Stuff you Should Know from house Stuff Works 0:00:04.640 --> 0:00:12.959 dot com. Hey, and welcome to the podcast. I'm Josh 0:00:13.000 --> 0:00:18.000 Clark with Charles W. Chuck Bryant, and Jerry all Right, Yeah, 0:00:18.440 --> 0:00:21.320 that makes the stuff you Should Know. Have you ever 0:00:21.360 --> 0:00:24.400 had one of those? Uh? I don't know why I 0:00:24.440 --> 0:00:26.240 wanted one, but when I was a kid, I wanted 0:00:26.239 --> 0:00:28.960 one of those coined things you want your hip to 0:00:29.040 --> 0:00:33.200 make change. I wanted one of those worse than anything. Yeah, 0:00:33.240 --> 0:00:35.440 And I don't think like a peanut vendor. I don't 0:00:35.479 --> 0:00:37.680 know when I said whatever was at six flags whatever 0:00:37.720 --> 0:00:39.839 and I saw those things, I just thought it was boss. 0:00:40.360 --> 0:00:42.000 That's really funny. And I don't think I knew that 0:00:42.040 --> 0:00:44.000 you could buy them for like three bucks or else. 0:00:44.040 --> 0:00:46.840 I would have bought a bunch of them. Yeah, because 0:00:46.880 --> 0:00:50.280 there's not much to them. It's just like the thing's 0:00:50.320 --> 0:00:53.720 not counting anything when you press it with your thumbs releases. 0:00:54.280 --> 0:00:57.160 But each one, you know your quarters. They have different sizes, 0:00:57.360 --> 0:01:00.040 so you know, you can just without even look and 0:01:00.320 --> 0:01:02.960 you could go, here's three quarters, buddy. I know what 0:01:03.080 --> 0:01:05.560 somebody's getting for Christmas this year. I just thought of 0:01:05.600 --> 0:01:07.280 that out of nowhere. I haven't remember that since I 0:01:07.319 --> 0:01:08.680 was a kid. I was obsessed with those things for 0:01:08.680 --> 0:01:11.440 a little while. Well, you know what, you're technically obsessed 0:01:11.480 --> 0:01:18.399 with a dispenser of currency. How's that seed that one up? Yeah? Yeah, 0:01:18.480 --> 0:01:20.679 knocked it out of the part. I collected banks too, 0:01:20.720 --> 0:01:22.920 which is a weird thing for a kid to do. 0:01:23.080 --> 0:01:25.600 Banks like piggy banks. Yea even No, none of them 0:01:25.600 --> 0:01:28.760 were piggybanks. What was your favorite one? Oh? Man, I 0:01:28.840 --> 0:01:31.480 still have the collection. My mom's got them. Um wonder 0:01:31.520 --> 0:01:34.120 if they're worth any money? And I doubt it. I 0:01:34.160 --> 0:01:36.880 mean it was like a Garfield Bank and uh and 0:01:38.560 --> 0:01:43.679 uh opus the penguin Eric Davis? Now was it Opus 0:01:45.319 --> 0:01:47.800 from Bloom County? How am I blanking out on that? 0:01:47.800 --> 0:01:51.760 That was my favorite comic. I don't know that sounds right, man, 0:01:52.960 --> 0:01:55.480 I'm losing it, buddy. So the penguin from Bloom County, 0:01:55.480 --> 0:01:58.000 we're going with that. I was obsessed with Bloom County 0:01:58.120 --> 0:02:02.760 and then Change Counters and Biggiebanks. Cool. That was my childhood. 0:02:02.880 --> 0:02:07.320 And Dale Murphy not Eric Davis? Now, who's that? Who's 0:02:07.400 --> 0:02:11.919 for the Reds? Oh? The Reds player? Yeah? He was great, though, 0:02:11.919 --> 0:02:15.400 I love it he as a non Reds fan, I 0:02:15.480 --> 0:02:18.400 was an Eric Davis fan, I'm with you. Where are 0:02:18.440 --> 0:02:22.280 you obsessed with? I like baseball, baseball cards? Did you 0:02:22.639 --> 0:02:25.680 anything mad magazines? Yeah? Me too? Those are still I 0:02:25.720 --> 0:02:28.160 think at my dad's house. They'd better be. You still 0:02:28.160 --> 0:02:32.120 got him? Uh? What else did I collect? I saved 0:02:32.160 --> 0:02:35.239 up my sports illustrated for years too. Um. And remember 0:02:35.280 --> 0:02:37.000 the first one I ever got had Muhammad Ali on 0:02:37.040 --> 0:02:39.320 the cover. That's how old I am. It was during 0:02:39.360 --> 0:02:41.760 his comeback, and when he was like fat and mustachioed. 0:02:42.080 --> 0:02:45.200 Don't call it come back. It was not not much 0:02:45.200 --> 0:02:49.480 of one. That's not how that goes. Uh, how's that 0:02:49.520 --> 0:02:51.600 first side track to get us going? I haven't even 0:02:51.600 --> 0:02:54.400 done the intro. Let's hear it? So the intro is 0:02:54.440 --> 0:02:59.240 as follows Chuck in two thousand thirteen New York Magazine, 0:02:59.360 --> 0:03:02.560 not the New York Times, not New Yorker, New York Magazine, 0:03:02.639 --> 0:03:05.079 which is an equally good publication in that time out 0:03:05.080 --> 0:03:09.440 in New York, not the Village Voice, all right, Just 0:03:09.639 --> 0:03:13.239 New York Magazine. Um, which is actually where the movie 0:03:13.280 --> 0:03:15.919 Saturday Night Fever came from. It came from an article 0:03:16.040 --> 0:03:20.080 that was later admitted to be completely fabricated by the author. Yeah, 0:03:20.160 --> 0:03:23.320 in that magazine. Anyway, New York Magazine ran a really 0:03:23.400 --> 0:03:26.919 interesting article in January called um Or January two team 0:03:26.919 --> 0:03:30.080 called SuDS for Drugs, and it talked about how there's 0:03:30.080 --> 0:03:36.320 a huge black market for tide laundry detergent, specifically liquid 0:03:36.360 --> 0:03:40.120 tide in the United States. Yeah, they do not make 0:03:40.120 --> 0:03:43.480 it anymore. No, they make plenty of it, but tons 0:03:43.520 --> 0:03:47.120 of it gets stolen. And the reason why is tied 0:03:47.760 --> 0:03:52.360 is such an agreed upon great laundry detergent that tied 0:03:52.880 --> 0:03:56.480 and only tied. Like if you tried to use gain 0:03:56.640 --> 0:04:00.040 or um all or anything like that, you would it 0:04:00.160 --> 0:04:03.520 turned away. But if you have a jug of Tide 0:04:04.000 --> 0:04:07.280 liquid laundry detergent, you can buy drugs in the United 0:04:07.280 --> 0:04:10.360 States with it. It is agreed upon as a currency. 0:04:10.760 --> 0:04:12.800 I had no idea even though you can just buy 0:04:12.800 --> 0:04:15.800 it in the store. Yeah, that's that's the part I 0:04:15.840 --> 0:04:18.440 don't get, because if you're a crackhead and you steal 0:04:18.440 --> 0:04:20.839 a carton of them, then all of a sudden, you 0:04:20.839 --> 0:04:23.040 didn't have to pay for this tide and you can 0:04:23.120 --> 0:04:26.400 use it to buy drugs. Interesting, why don't use any 0:04:26.400 --> 0:04:27.800 of that stuff? And I don't mean to pick on 0:04:27.960 --> 0:04:31.320 just crackheads. If you're a junkie. Same thing. Sure, if 0:04:31.360 --> 0:04:35.440 you have a gambling habit. Yeah, we've man, we got 0:04:36.600 --> 0:04:37.880 we got a lot of crap from a couple of 0:04:37.880 --> 0:04:41.320 people by using about using the word junkie. Yeah, it's 0:04:41.400 --> 0:04:43.599 pretty derogatory if you think about it. I guess, well, 0:04:43.640 --> 0:04:46.760 but it's a word with a definition which means something, 0:04:46.800 --> 0:04:48.560 and that's what it means. I mean, it's not like 0:04:49.200 --> 0:04:51.920 we were just like slagging people. Yeah, no, I get 0:04:51.960 --> 0:04:54.839 what they're saying, though. You're saying like it's just such 0:04:54.880 --> 0:04:58.080 a dismissive term of anyone who's addicted. It really kind 0:04:58.080 --> 0:05:01.039 of flies in the face of the disease model of addiction. Yeah. Yeah, yeah, 0:05:02.160 --> 0:05:03.760 I had to talk to the people who call us 0:05:03.760 --> 0:05:06.640 out on that. I get it. But the point is 0:05:06.960 --> 0:05:10.960 tiede is now a currency as like remember our prison 0:05:11.000 --> 0:05:14.240 episode where we talked about how honey buns are currency. Yeah, 0:05:14.400 --> 0:05:20.360 same thing, right, cigarettes currency, deer skins, Yeah, those were 0:05:20.400 --> 0:05:22.960 currency once. That's where we get the word bucks from. 0:05:23.000 --> 0:05:25.080 I think what you're getting at. Oh, I can't wait 0:05:25.120 --> 0:05:28.320 to get to that stuff later. Okay, etymology, I love 0:05:28.360 --> 0:05:32.400 that stuff. Um, I think what you're trying to say 0:05:32.760 --> 0:05:35.880 is that or what you are saying is that currency 0:05:36.080 --> 0:05:40.160 is nothing more than the medium of exchange in a 0:05:40.240 --> 0:05:43.560 substitute for something, a good, or a service. It is 0:05:43.600 --> 0:05:46.640 an agreed upon that's the key. Yeah, it's got to 0:05:46.680 --> 0:05:48.920 be agreed upon. Yeah, you can't be like I'll give 0:05:48.960 --> 0:05:51.839 you five Lincoln logs for a car. Well that's what 0:05:51.839 --> 0:05:54.200 you do when you're a kid, right, and you go, 0:05:54.320 --> 0:05:56.200 I don't think I want Linkol logs, and everybody goes, 0:05:56.279 --> 0:05:58.880 oh you do, right. But if the other person says 0:05:59.680 --> 0:06:02.000 those Lincoln I don't want Lincoln logs, then what you 0:06:02.040 --> 0:06:04.080 have are Linkol logs, not a currency, because it has 0:06:04.120 --> 0:06:08.520 to be mutually agreed upon, like you say, like dollar bills. Yeah. 0:06:09.400 --> 0:06:12.080 I've gone off on this on our show about the 0:06:12.800 --> 0:06:16.560 amazing fact that this paper we have all agreed is 0:06:16.600 --> 0:06:19.360 worth something, and as the only reason it's worth something 0:06:19.440 --> 0:06:25.039 that people dedicate their lives to pursuing paper is is 0:06:25.120 --> 0:06:33.720 as ephemeral as a cloud. Almost. Ye, not the greatest 0:06:33.720 --> 0:06:36.040 analogy you I've made, but it's still kind of works. 0:06:37.400 --> 0:06:40.320 All right. So let's let's talk on olden days and 0:06:40.400 --> 0:06:44.400 currency as a substitute for things. Um, what currency did 0:06:44.760 --> 0:06:47.120 was solved the problem. It allowed you to give change 0:06:47.360 --> 0:06:49.440 and make change. Yeah, that's a that's a big one 0:06:49.520 --> 0:06:52.560 because back in the day, if you had a bushel 0:06:52.600 --> 0:06:56.280 of corn and you wanted a chicken, you would go 0:06:56.320 --> 0:06:59.000 to your neighbor. Well, you had to find somebody they 0:06:59.080 --> 0:07:01.000 had a chicken that on a corn. So that's the 0:07:01.040 --> 0:07:03.880 first problem. That's a problem. But what if you do 0:07:04.000 --> 0:07:06.359 find someone, You're like, great, my neighbor's got a chicken 0:07:06.640 --> 0:07:08.840 and I've got this corn. He wants this corn, he 0:07:08.880 --> 0:07:10.120 wants the corn, but he says, you know what, this 0:07:10.200 --> 0:07:13.720 chicken is worth a lot more than that corn. Somebody's 0:07:13.760 --> 0:07:16.679 getting a bad deal until you can make change. Yeah, 0:07:16.720 --> 0:07:19.440 because what if you could. That's not the best example 0:07:19.440 --> 0:07:21.520 because you could take out some of the corn. Let's 0:07:21.520 --> 0:07:25.600 say you can't chop a chicken. Yeah, well you got 0:07:25.600 --> 0:07:28.720 a cow. Your neighbor has a chicken, and it's not 0:07:28.800 --> 0:07:32.640 an even trade. But you just need one chicken and 0:07:32.680 --> 0:07:35.720 your neighbor just needs one cow. You can't make change 0:07:35.760 --> 0:07:38.040 like that. You can't make change. So that's one of 0:07:38.080 --> 0:07:43.119 the first roles that currency it's fulfilled, was a way 0:07:43.160 --> 0:07:47.240 to make change, to make trade more equal. Yeah, and 0:07:47.240 --> 0:07:48.720 before that, I think there were a lot of bad 0:07:48.760 --> 0:07:52.480 deals going down out of desperation. You know, like if 0:07:52.480 --> 0:07:55.880 your family really needed that chicken for a reason, you 0:07:56.240 --> 0:07:58.680 might end up taking a bad deal just because you 0:07:58.720 --> 0:08:01.480 need that chicken. You give your cow away for that chicken. Yeah, 0:08:01.640 --> 0:08:05.360 and then your family would berate you. That's right. Where's 0:08:05.360 --> 0:08:07.559 the milk, honey? Yeah, this is like the magic beans 0:08:07.560 --> 0:08:10.000 and sit in all over again. Can't milk a chicken, honey? 0:08:11.120 --> 0:08:15.920 You get berated by your wife. Another reason that currency 0:08:16.200 --> 0:08:19.800 uh became popular is because it allowed you for the 0:08:19.840 --> 0:08:25.200 first time to really amass wealth. Because you can harvest 0:08:25.240 --> 0:08:27.960 all the corn you want, but that corn is gonna 0:08:28.000 --> 0:08:29.880 go bad unless you can find a way to trade 0:08:29.960 --> 0:08:32.680 it in. A barn full of rotten corn does no 0:08:32.720 --> 0:08:34.720 one any good. It doesn't make you any richer, like 0:08:34.880 --> 0:08:39.120 in in practice. Practically speaking, you would be an extraordinarily 0:08:39.200 --> 0:08:43.240 wealthy person if you had tons of corn in theory, 0:08:43.600 --> 0:08:46.600 but like you said, it's gonna go bad, so you 0:08:46.640 --> 0:08:51.200 could lose all all your wealth would literally rot away. 0:08:51.360 --> 0:08:54.640 That's not the case with say a gold coin. Gold 0:08:54.640 --> 0:08:58.280 coins aren't gonna go bad and deteriorate. So there that 0:08:58.480 --> 0:09:02.360 stand in for those enormous stocks of corn. Because you 0:09:02.400 --> 0:09:05.080 had all that corn and then you traded it for 0:09:05.160 --> 0:09:08.240 gold coins. So what you did was you took your 0:09:08.280 --> 0:09:13.280 wealth of corn and stored it into something of equal value, 0:09:13.400 --> 0:09:15.960 in this case gold coins. Yeah, and that had a 0:09:16.120 --> 0:09:21.959 huge impact on civilization because the most powerful people were 0:09:22.000 --> 0:09:25.959 not just the ones who held the political and military influence. 0:09:26.000 --> 0:09:28.440 All of a sudden, if you could accumulate wealth, then 0:09:28.480 --> 0:09:30.400 you could buy that jump. Yeah. It gave rise to 0:09:30.440 --> 0:09:34.480 the merchant class, and it democratized. Is that the word? 0:09:35.280 --> 0:09:38.400 It democratized the world. It did because before it was 0:09:38.440 --> 0:09:41.520 like you were born into a wealthy, noble family and 0:09:41.520 --> 0:09:44.840 that's gain power. And if you weren't t yes, that 0:09:44.920 --> 0:09:47.520 meant that you worked the land for this wealthy family. 0:09:47.880 --> 0:09:50.880 But if you can sell something and get money in 0:09:50.960 --> 0:09:53.280 exchange for it, instead of a cow for a chicken, 0:09:54.360 --> 0:09:56.000 you say that junk up and you buy someone to 0:09:56.040 --> 0:10:01.560 go kill that landowner, and then that's your land. Right. Democracy, 0:10:01.559 --> 0:10:07.280 democracy or uh. They are generally considered to be four 0:10:07.520 --> 0:10:12.800 categories of UM currency. You have commodity currency, coins, paper money, 0:10:13.000 --> 0:10:18.400 and electronic currency these days, and in the commodity system 0:10:18.440 --> 0:10:22.440 it is a placeholder, like we said, um for purchasing power, 0:10:22.520 --> 0:10:27.079 but it is also has value as a thing because 0:10:27.160 --> 0:10:30.640 corn is valuable. Um, it's not just a piece of paper, 0:10:31.400 --> 0:10:33.319 where in the case of the Aztecs or little cacao 0:10:33.400 --> 0:10:36.320 beans were valuable and so they use those this money. 0:10:36.840 --> 0:10:40.079 But um, one of the problems with that is if 0:10:40.160 --> 0:10:42.880 the person you're trading with doesn't find that valuable, then 0:10:42.960 --> 0:10:47.640 it's worthless. Yeah. Usually within a society, everyone will find 0:10:47.679 --> 0:10:52.200 that commodity currency valuable. Like the Aztecs with cacao. They 0:10:52.240 --> 0:10:54.320 love this stuff. They made chocolate out of it. It 0:10:54.360 --> 0:10:57.160 was the elixir of the gods, that kind of stuff. 0:10:57.160 --> 0:11:00.400 They drank it right. Yeah. Mina Zuma drank like forty 0:11:00.440 --> 0:11:03.240 cups of it today until he died from drinking too 0:11:03.320 --> 0:11:08.080 much chocolate. Um. But the cankey sitters who came didn't 0:11:08.440 --> 0:11:12.400 value cocow beans at all, so rather than trade, they 0:11:12.520 --> 0:11:17.600 just took everything yeah and dumped the cacao beans because 0:11:17.600 --> 0:11:19.920 it was worthless to them. Yeah, but that is a 0:11:19.920 --> 0:11:22.760 good example of a commodity based currency, Like even if 0:11:23.280 --> 0:11:28.360 even if everything else falls apart, that cocw beans still 0:11:28.360 --> 0:11:30.560 has value and that you can make chocolate out of it. 0:11:31.280 --> 0:11:34.560 In the society, chocolate is valued ergo they value the 0:11:34.600 --> 0:11:37.800 cocw beans which use it as currency. Plus in this case, 0:11:38.120 --> 0:11:41.440 cocow beans um are easy to carry, so they're portable, 0:11:42.000 --> 0:11:45.839 and they're plentiful and small so you can make change 0:11:45.840 --> 0:11:48.400 with them. Yeah, but not everything was the cacao bean. 0:11:48.559 --> 0:11:51.760 In commodity currency, a lot of stuff is perishable more 0:11:51.800 --> 0:11:55.400 perishable um, a lot of like cattle is super bulky. 0:11:55.400 --> 0:11:59.320 You can't carry on a bunch of cows, goats, goats um. 0:11:59.360 --> 0:12:02.040 But never less, that is a form of commodity currency. 0:12:02.080 --> 0:12:06.040 It's just had its downside. Like the goat has has 0:12:06.160 --> 0:12:11.080 value in and of itself. Yeah, cute, cute milk, meat 0:12:11.520 --> 0:12:15.800 and cute hair and cute and very cute. I'm gonna 0:12:15.800 --> 0:12:17.400 get one of those pigmy goats one of these days. 0:12:18.520 --> 0:12:20.280 It's gonna happen. You're gonna come over to my house 0:12:20.280 --> 0:12:22.320 and the little goat is gonna bounce in the room. 0:12:22.720 --> 0:12:25.400 Clip clop, You're gonna go. What the Have you ever 0:12:25.400 --> 0:12:29.880 seen the lamb? I showed you that, right, dude, that's 0:12:29.920 --> 0:12:34.080 probably my top five things ever. If you don't know, 0:12:34.240 --> 0:12:39.800 be the lamb into YouTube right now. What was it 0:12:39.880 --> 0:12:42.280 a lamb? I think so? I thought it's a pigmy goat. 0:12:43.240 --> 0:12:46.880 I think it's a lamb. Jerrys this is lamb. Alright, 0:12:46.920 --> 0:12:55.000 I win. Alright, here's some cocow beans. Nice. Alright, so well, 0:12:55.040 --> 0:12:57.760 hold on, hold on. I feel like we've got a 0:12:57.800 --> 0:13:07.040 really good flow going. Okay, so let's interrupted with these messages. Okay, 0:13:07.080 --> 0:13:08.760 we're back. Let's see if we can get the mojo 0:13:08.880 --> 0:13:11.240 back again. All right, the mojo is still flowing because 0:13:11.240 --> 0:13:14.200 our message break in reality was only two seconds long. 0:13:14.640 --> 0:13:18.200 That's our dirty secret. Coins is our next form of currency. 0:13:18.280 --> 0:13:22.200 And they were first minute a minute in Lydia, which 0:13:22.240 --> 0:13:26.559 is modern Turkey, and they're king uh Croasis or crosis. 0:13:27.200 --> 0:13:29.200 So you know, I'm gonna make these little small metal ingots. 0:13:29.200 --> 0:13:31.439 I'm gonna stamp them with our emblem. And it's six 0:13:31.520 --> 0:13:34.320 for d BC and this is called coins and it's 0:13:34.320 --> 0:13:37.599 worth something. And the Greek said this is great, and 0:13:37.640 --> 0:13:40.280 the Romans said this is great, and they're we're gonna 0:13:40.320 --> 0:13:42.679 make ours out of silver and gold. So it's actually 0:13:42.720 --> 0:13:46.280 worth something. Although when you think about it, that's just 0:13:47.000 --> 0:13:50.720 you know, worth something because someone says it's worth something. Gold, sure, 0:13:50.760 --> 0:13:52.920 all of it. Yeah. I read this Forbes article that 0:13:53.000 --> 0:13:57.800 basically said all currencies a fiat currency. Fiat currency means 0:13:57.840 --> 0:14:01.200 that it has valued by fiat, like the fiat of 0:14:01.240 --> 0:14:06.280 the king a decree um and it says the government 0:14:06.360 --> 0:14:09.199 or the king says this has value. It's it's nine 0:14:09.360 --> 0:14:14.560 seven gold. It's valuable, so go traded as such by fiat. Right. Yeah, 0:14:14.559 --> 0:14:16.200 if you think about the only things that really have 0:14:16.320 --> 0:14:19.160 real value or like food and water pretty much, you know, 0:14:19.440 --> 0:14:21.960 like you can make the case that a commodity based 0:14:21.960 --> 0:14:26.720 currency like cocao beans isn't necessarily a fiat currency because 0:14:26.720 --> 0:14:29.240 it does have inherent value that anybody can use. But 0:14:29.400 --> 0:14:34.080 gold is it's not really that valuable. It's not really 0:14:34.080 --> 0:14:38.080 that useful, especially in like a pre industrial society. I 0:14:38.080 --> 0:14:40.880 wonder if gold first became valuable because it was shiny 0:14:40.960 --> 0:14:45.960 and literally, yes, they could make pretty things with it, honestly, yes, interesting, 0:14:46.000 --> 0:14:48.920 I think that's exactly why. Because it's so malleable you 0:14:48.920 --> 0:14:52.440 can't make tools out of it. Even today, it's not 0:14:52.520 --> 0:14:54.640 that useful. I mean, they use it in some solid 0:14:54.640 --> 0:14:58.680 state electronics and things, but it's not it's more valuable 0:14:58.840 --> 0:15:03.480 simply because it's go old. Yeah, So even if it's 0:15:03.520 --> 0:15:07.520 backed with gold, it is technically still a fiat currency, 0:15:07.680 --> 0:15:10.560 I've never heard that term f I A T. So 0:15:10.600 --> 0:15:12.840 what does the Fiat car all about? That mean? It's 0:15:12.880 --> 0:15:18.200 just special because they say it is all right? Um 0:15:18.320 --> 0:15:20.960 in China, I thought the Chinese made the first coins, 0:15:21.080 --> 0:15:26.040 but um, yeah, Grabster says that it happened about the 0:15:26.080 --> 0:15:28.640 same time it did in the West fifth century BC. 0:15:28.880 --> 0:15:34.440 They started out oddly with tools like knives, shapes as 0:15:34.480 --> 0:15:37.000 currency with little holes drilled in them so they could 0:15:37.040 --> 0:15:39.200 keep it on a string, and they just shrank over 0:15:39.240 --> 0:15:41.800 the ears until it was about the size of a coin, right, 0:15:41.880 --> 0:15:43.560 so I thought was odd, But they kept a hole 0:15:43.640 --> 0:15:47.000 in there. So even until like the mid nineteenth century, 0:15:47.480 --> 0:15:51.000 the Chinese coins still where this, these little round coins 0:15:51.000 --> 0:15:52.800 with a hole in the middle so you could string 0:15:52.840 --> 0:15:55.480 them on a string. Yeah, that's because they didn't have 0:15:55.560 --> 0:15:58.360 the little coin dispenser on the hip they would have 0:15:58.400 --> 0:16:02.720 thought of that, which surprising because the Chinese invented practically everything, 0:16:03.760 --> 0:16:07.960 the coin dispenser, the hip mounting coin dispenser. Did they 0:16:07.960 --> 0:16:10.640 even still make those? Sure they do. I'll bet alright, 0:16:10.760 --> 0:16:14.600 I'm gonna buy one. Um. If not, Archie McPhee probably 0:16:14.600 --> 0:16:18.160 makes it in an ironic version. So who's that they make? Um? 0:16:18.200 --> 0:16:22.080 You've seen all their stuff. They make like funny like 0:16:22.600 --> 0:16:27.200 they were the original, probably like bacon air, freshener, car fresh, 0:16:27.720 --> 0:16:31.120 they make stuff like that. They make horsehead, gotcha, they 0:16:31.160 --> 0:16:35.120 outfit um, they all their stuffs in urban outfitters, probably 0:16:35.120 --> 0:16:38.400 in the chakey section. Yes, all right, I hate them. Then. 0:16:40.640 --> 0:16:43.200 Uh So, one of the big impacts of coins was 0:16:43.320 --> 0:16:48.400 now the government actually controlled the money supply and could 0:16:48.440 --> 0:16:51.760 manipulate it and say what it's worth. And Roman emperors 0:16:51.800 --> 0:16:54.880 were dumb and said, you know what, We're just gonna 0:16:55.000 --> 0:16:57.360 reduce your amount of precious metal and some of these 0:16:58.280 --> 0:17:01.600 because that makes us richer. But that devalued things such 0:17:01.680 --> 0:17:03.640 that it ended up being one of the factors in 0:17:03.680 --> 0:17:06.679 their downfall. Yeah, they didn't quite understand how it worked, 0:17:07.000 --> 0:17:10.399 and it took thousands of years for anybody to figure 0:17:10.440 --> 0:17:13.040 out really how it worked. But basically, if you still 0:17:13.040 --> 0:17:14.960 know how it works, kind of, you know, I think 0:17:14.960 --> 0:17:17.800 we have a better grasp than the early Roman emperors 0:17:18.160 --> 0:17:20.640 because they would say, hey, man, I've got a ton 0:17:20.720 --> 0:17:26.119 of gold, and my predecessors would make ten thousand gold 0:17:26.160 --> 0:17:29.320 coins out of a ton. But I, being as clever 0:17:29.400 --> 0:17:32.679 as I am, I'm going to make twenty thousand gold 0:17:32.680 --> 0:17:36.040 coins out of this ton and double my money. But 0:17:36.240 --> 0:17:39.399 rather than double the money, it devalued the currency and 0:17:39.480 --> 0:17:42.760 led to the decline of the Roman Empire. That's right, 0:17:43.040 --> 0:17:47.360 like you said, but that's how yeah, And after that, um, 0:17:47.400 --> 0:17:50.159 it took a while for coins to come back in fashion, 0:17:50.200 --> 0:17:52.359 all the way to the Renaissance because in the dark Ages, 0:17:53.080 --> 0:17:56.120 because of a lot of that uh stuff, people didn't 0:17:56.119 --> 0:17:59.679 trust coins, right, and for good reason, because there was 0:17:59.800 --> 0:18:03.560 a someone behind it who could decree the percentage of 0:18:03.680 --> 0:18:07.119 gold in that coin. The thing is is um and 0:18:07.119 --> 0:18:11.760 we'll get to this later. The powers that be can 0:18:11.840 --> 0:18:15.560 decree value, but ultimately it's up to the general public, 0:18:15.560 --> 0:18:18.440 the people who are trading in these things, to determine 0:18:18.800 --> 0:18:22.280 really how valuable they are. There's something called perception of 0:18:22.400 --> 0:18:25.720 value that has to do with just how valuable a 0:18:25.800 --> 0:18:27.720 currency is are not we'll talk about in a minute, 0:18:27.720 --> 0:18:31.240 but that's what happened in Rome. Uh. Next up, we 0:18:31.320 --> 0:18:34.720 have paper money, or is they call it folding money 0:18:35.320 --> 0:18:40.640 here in the South, and they paper money was first 0:18:40.680 --> 0:18:43.360 developed by the Chinese as well, and they used um, 0:18:43.359 --> 0:18:48.560 like you said, buckskin sometimes bark, parchment, and it was 0:18:48.680 --> 0:18:51.720 a bill of payment and leather was also used in 0:18:51.760 --> 0:18:55.080 Europe around eleven d which didn't really catch on then. 0:18:55.400 --> 0:18:57.200 Now I think leather money be kind of cool though, 0:18:57.600 --> 0:19:02.280 leather moniture. If you know, if you hate animal, what 0:19:02.440 --> 0:19:04.159 better way to kill more of them? I wonder how 0:19:04.280 --> 0:19:07.280 much a cow would have been worth then, yeah, because 0:19:07.359 --> 0:19:10.800 you while they were using the skin for other stuff anyway, 0:19:11.680 --> 0:19:16.080 good point though. Uh. In Sweden in sixteen sixty one 0:19:16.119 --> 0:19:19.920 they issued paper money, but they didn't quite understand it 0:19:19.960 --> 0:19:22.239 either and flooded the market with it, which made it 0:19:22.520 --> 0:19:27.119 almost worthless as well. Still still had to figure it out. Um. 0:19:27.160 --> 0:19:32.080 I get the the uh, I get the desire though, like, oh, 0:19:32.119 --> 0:19:34.520 everyone says this stuff's worth something, let's just print a 0:19:34.520 --> 0:19:38.480 ton of it exactly. Yeah. Um. So it didn't catch 0:19:38.520 --> 0:19:41.159 on after the Swedish experiment of the seventeenth century, but 0:19:41.200 --> 0:19:43.679 it didn't take too much longer. It was the eighteenth 0:19:43.760 --> 0:19:47.119 century when paper money finally did catch on, and it 0:19:47.240 --> 0:19:50.720 was based on the practice of goldsmiths at the time, 0:19:51.160 --> 0:19:53.280 where if you gave them some gold, they give you 0:19:53.320 --> 0:19:56.600 basically an iou say they were making something out of 0:19:56.640 --> 0:19:58.800 the gold, or they were hanging onto the gold before 0:19:58.840 --> 0:20:02.760 you you had what what It amounts to a promissory 0:20:02.840 --> 0:20:05.919 note saying you bring this I O U back to me, 0:20:06.160 --> 0:20:08.439 and I'll give you this amount of gold and return. 0:20:09.040 --> 0:20:12.560 It was basically the first what what's called gold backed 0:20:12.960 --> 0:20:16.439 paper currency. And once banks figured out just how that 0:20:16.480 --> 0:20:20.240 could work in theory and in practice, anybody could start 0:20:20.240 --> 0:20:23.600 issuing currency. Yeah, and um money was backed by gold, 0:20:23.960 --> 0:20:25.800 even right here in the US all the way up 0:20:25.880 --> 0:20:32.720 until nine UM every dollar had and not theory, every 0:20:32.760 --> 0:20:36.640 dollar had gold somewhere, not just dollars. Pretty much any 0:20:36.640 --> 0:20:39.080 paper currency in the world at the time was backed 0:20:39.119 --> 0:20:42.199 by gold, silver, some sort of precious metal that we 0:20:42.240 --> 0:20:45.720 all agreed was valuable because it's shiny. But there was 0:20:45.760 --> 0:20:48.520 a stock somewhere in the world that you could trade 0:20:48.920 --> 0:20:54.159 your paper money for that value in gold. Yeah, you 0:20:54.200 --> 0:20:58.280 could go somewhere to the gold tradery say here, I 0:20:58.359 --> 0:21:00.800 want all this money in gold. Did you know That's 0:21:00.840 --> 0:21:04.320 what the the Wizard of Oz is about. It's an 0:21:04.359 --> 0:21:08.960 allegory for the gold standard. Oh man, it's depending on 0:21:08.960 --> 0:21:11.800 who you ask, it's about ten different things. It's an allegory, 0:21:11.920 --> 0:21:14.600 populist allegory for the gold standards. I just posted an 0:21:14.680 --> 0:21:17.840 article about like ten different theories on what Wizard of 0:21:17.840 --> 0:21:22.080 Odds means on our Facebook page, and yours is right 0:21:22.119 --> 0:21:24.919 and then everyone else is wrong. Thank you. That's all 0:21:24.960 --> 0:21:28.399 I ever want to hear from you. I UM. So, 0:21:28.440 --> 0:21:31.840 now we're on to E money, which is uh, it 0:21:31.880 --> 0:21:35.119 seems like something super new, but it actually came about 0:21:35.240 --> 0:21:39.479 after World War Two when UM banks started recording their 0:21:39.520 --> 0:21:44.159 information of the day onto magnetic reels and taking it 0:21:44.200 --> 0:21:47.639 to the Federal Reserve Bank, and all of a sudden 0:21:47.640 --> 0:21:49.520 they said, you know, we don't need these silly ten 0:21:49.920 --> 0:21:53.320 dollar bills because we can just record this all electronically. 0:21:54.040 --> 0:21:56.520 And all it took then was a wire connection and 0:21:57.480 --> 0:22:01.439 trust for people to trust that this really is money, 0:22:01.520 --> 0:22:05.520 even though I'm not seeing any money right right then. 0:22:05.560 --> 0:22:07.640 That is the real distinction of it, because with an 0:22:07.760 --> 0:22:13.520 electronic transfer, originally you're transferring information about money, like I 0:22:13.600 --> 0:22:17.080 will I have a hundred thousand dollars over here that 0:22:17.160 --> 0:22:20.760 I officially give to you, and so that that electronic 0:22:20.840 --> 0:22:25.120 transfer becomes a promissory note in and of itself. UM 0:22:25.160 --> 0:22:27.520 and they figured out that they can do this after 0:22:27.560 --> 0:22:30.880 they realize that money in and of itself isn't valuable, 0:22:30.920 --> 0:22:33.959 so we can just do this whole thing electronically. And 0:22:34.000 --> 0:22:36.680 like you said, they did have hundred thousand dollar notes 0:22:36.720 --> 0:22:40.320 and apparently there's some in circulation still. There's a couple 0:22:40.440 --> 0:22:44.280 hundred of them in circulation. They had five hundred, one thousand, 0:22:44.400 --> 0:22:47.240 ten thousand, and hundred thousand dollar bills. There's a really 0:22:47.280 --> 0:22:50.520 neat mental floss article that you can read called a 0:22:50.600 --> 0:22:54.800 hundred thousand dollar Bill, The Story behind Large denomination Currency, 0:22:55.119 --> 0:22:58.440 and it talks all about that. But it was prior 0:22:58.560 --> 0:23:02.199 to the magnetic tapes that were passed from bank to 0:23:02.280 --> 0:23:05.399 bank or that recorded this information, and this is how 0:23:05.440 --> 0:23:10.080 banks would settle up transfers through ten thousand, hundred thousand 0:23:10.080 --> 0:23:13.280 dollar bills. Yeah, and the hundred thousand UM has Woodrow 0:23:13.320 --> 0:23:15.119