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  • Hacker News
  • The part where the bat wielding despot required payment using the money of his issue was left out.
    by markvdb
  • I just wanted to say that I have read many of your posts and you are one of the clearest technical writers on the internet.
    by bone_tag
  • The fable of barter… if you feel there is something too cartoonish about the idea, you are not wrong, read some Graeber (debt) if you want to understand how it really worked
    by chuliomartinez
  • I’m sorry to see so many comments bad mouthing the article when it seems like they didn’t read it. I thoroughly enjoyed it. The fable is convincing and lays down the hierarchical trust pretty clearly. It could benefit more from the political part of economy development, but even just as is, it’s a great primer on some of the more important concepts in modern banking.
    by rad-b
  • The order of how money emerges is wrong and thus the premise that each step moves the trust higher in hierarchy is wrong.

    It didn’t necessarily come from banter (see rai stones from yap island). Debt didn’t always come from currency (See Inca system of Reciprocity and Redistribution where there was no currency). Private Banks don’t always precede Central Banks (see Sumerian Temples).

    I do agree with the argument that money is backed by trust. But I don’t think it’s inherently hierarchical. I think if anything, money and its diverse manifestations in currency are a complex graph where of course there are regions that exhibit hierarchical behavior (eg. Chilean bank backed by Chilean Central Bank that issues bonds and buys or sells US dollars). But for example I believe Crypto/Cigarrets in Prison/Silver/Gold/etc aren’t part of that hierarchical region.

    by DanielVZ
  • This is a really useful taxonomy and illustrative stories... But these stories imply an ordering which is neither essential nor factual in most cases! Check out Graber's "Debt: The first 5000 Years" for some really interesting analysis, including how debt almost always preceded hard currency in early societies.

    https://en.wikipedia.org/wiki/Debt:_The_First_5,000_Years

    by evrydayhustling
  • As someone who works at a financial institution, this is a really refreshing and concise breakdown of money and monetary systems. I think the most important thing that people should realise from reading this is that none of the things we have in our monetary systems were dreamed up for no reason, each solves a clear problem, and often was found by multiple independent groups of people at different times. I absolutely love the fact that it's essentially just layers of trust, analogous to a certificate authority or a domain name system.

    And, of course, that the top level of trust is a bit arbitrary, and that "black money", of course the US Dollar, isn't worth more than trust in the US government.

    by Wilsoniumite
  • The villager parable is too egalitarian. That's not really how it worked.

    For most of history, peasants were sustenance farmers, meaning they grew their own food and if the harvest was bad, they could starve. For them, there was no such thing as insurance and they really needed ways to reduce risk. For example, they'd feast their neighbors so that when times were hard, the neighbors would hopefully help them out in turn. Investing in close-knit relationships isn't like barter - it's more like informal credit. Kinship networks still work something like this today.

    And this meant they didn't really need money. Social obligations were everything.

    But how do people who aren't peasants themselves get food? By extracting rents and taxes, in return for protection and certain services, perhaps plowing fields. Local "big men" might take payment in kind, but for a more organized government, they'd collect taxes using money, which gave the peasants incentives to grow and sell food for money.

    So villages would monetize or demonetize depending on the state of nearby governments. A monetized society allows people who aren't farmers to buy food. It allows cities to exist. Therefore, civilization was built on military force, taxes, and rent extracted from peasants, who were the basis of a mostly agricultural economy.

    Be glad our civilization isn't built on sustenance farming anymore.

    by skybrian

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