
Money Interpreted as an IOU - nkurz
http://heteconomist.com/money-interpreted-as-an-iou/
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trjordan
The hierarchy at the bottom is interesting, because going down the hierarchy
doesn't get you a bunch. Why do I want gift cards? Or your shitty voucher?
Mostly, I don't, though airline points are interesting because I can get them
faster than money if I fly a lot.

There's another way to go down that list, and it's risk for monetary
instruments. Cash is always at the top, with government bonds lower than that.
Bank deposits like CD are lower and a bit riskier. At the bottom, you have
things like sketchy companies issuing bonds with 20% interest, or vague
promises from a founder that "this 1% equity will be worth 1% of a billion
dollars!". Sounds better than cash, but definitely risky.

Anything that doesn't fit somewhere one that curve doesn't exist. Your IOU
doesn't get me more money, and I incur a bunch more risk. Since nobody wants
that, you don't see it unless it shows up on the price / risk curve somewhere
sane.

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ap22213
David Graeber wrote about the origins of money as IOUs pretty extensively in
his book "Debt: The first 5,000 years"

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dwarman
British money is - or was - explicitly an IOU. The notes bore the phrase "I
promise to pay the bearer on demand the sum of (n) pounds ..." Used to be
gold, not sure what you get these days. Other countries also, like India.

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altomami
Even the term "banknote" makes it explicit: a note (of credit) issued by the
central bank. Coins are not formally IOU's, because historically they had
intrinsic value.

