US currency may say “In God We Trust” but in order for the bills to mean anything, we place our trust in the US government. US currency is a type of fiat currency (as opposed to a commodity money) that has the backing of the US government. In order for something to be considered money, it must serve three general properties: store of value, a unit of account, and a medium of exchange. Each can be seen in the clip above. A lemonade seller won’t accept just anything, they want money (medium of exchange). We know the price of the lemonade because we use dollars as a measure of its worth (unit of account) and we expect those dollars to be worth the same amount over a certain period time (store of value).
The Baudelaire orphans have been sent to the Lucky Smells Lumbermill and are being forced to work on the production floor. After a grueling morning of “log day,” the workers are given an entire five minutes for lunch, but the Baudelaire’s come to find that lunch consists of gum. Frustrated, they wonder if they can use their wages to buy something else, but it turns out that the Lucky Smells Lumbermill pays their workers in coupons rather than actual currency. The coupons don’t have any value since the workers don’t have any money to go out and buy things anyway. The workers also don’t have power to leave or demand better conditions because Lucky Smells is the only place to work in town.
When a single firm controls the labor market in a region, they are said to have monopsony power in the market. Monopsonies can pay workers below competitive wages because workers are unable to find alternative employment opportunities. In this case, the Lucky Smells Lumbermill pays them almost nothing since the coupons can’t really be redeemed anywhere.
The gang tries to catch a leprechaun for St. Patrick’s Day so that they can get his three wishes. In their quest, Beast Boy uses one of his wishes to become a leprechaun and beings to “live the leprechaun life” which includes a lust gold. Beast boy sells all of his friend’s stuff in exchange for gold. He then announces that his goal is to get the government back on the gold standard and attempt to fix the exchange rate. They go on to explain the rationale behind the gold standard and Nixon’s authorization to end the gold standard.
Thanks to “Mike on Twitter” for posting about the clip!
Loralei is seeking to take over the world and she wants money, but Rooster shows up with a bag full of paper money instead of gold. Rooster explains to her that on Earth, paper money is just like gold although he mistakenly says that Ben Franklin was a US president. While dollars used to be based on gold, they have since been converted to fiat money is backed on faith of the US government.
In a “puff and paint” party, some patrons of a local dispensary have gone a bit too far in the describing the role of the Federal Reserve. While the stated goals of the Fed are price stability and full employment, this hallucination has the Fed at the center of a universe-wide conspiracy. Bloomberg has a podcast that looks at why so many conspiracy theories seem to form around the Federal Reserve.
My former student, Luke, sent me this clip. You should follow him on Twitter!
Vox takes a deeper look into the use of ramen as currency inside America’s prison system. Ramen serves a unique function as money since actual cash isn’t allowed in prisons. In order to serve as currency, an item needs to be durable, portable, and standardized, which ramen is. Ramen is the largest item purchased in prison commissaries and once inmates stockpile ramen, they can inflate/distort prices for other goods and services in the prison. The use of Ramen in prison economies is also mentioned in Brooklyn 99.
Stan describes the economy as being both real and not real at the same time. The market works because people believe in the economy and believe that paper money and plastic can count as spending. The concept of fiat money stems from people’s belief that the currency they hold actually has true value. This differs from commodity money in that the currency is not tied to a single asset.
Thanks to Zoe Cook-Nadel for the suggestion!
In this commercial, office workers are lamenting the apparent weakness of the dollar relative to other currencies. Another worker comes by with a hamburger from McDonald’s $1 menu and the office changes their tunes when they realize that a dollar can buy a whole hamburger.
One of the main characters just changed the value of the international currency to be zero which has the effect of causing all money to be worthless. The clip focuses on the president of the galactic federation and his aides discussing what to do about the sudden lack of money when the aides realize that without any money they won’t get paid and that they refuse to work for nothing. The president comes up with a solution that involves blowing his brains out with a handy space pistol.
Thanks for the summary and clip Ben Kupp!
A Business Insider correspondent travels around New York City with 100g of gold and a single Bitcoin to see how easy/difficult it is to conduct transactions using these alternative currencies. Even though gold is universally agreed currency, no one is willing to accept it. Bitcoin is a little more popular, but some local places didn’t accept it as payment.