Fun fact, the Chinese character 貝 that means something precious are part of a lot of compound characters related to trade and finance like 賬 "account" 資 "capital" 財 "wealth" 賦 "tax" 費 "expenses" 買 "to buy". And what is 貝 exactly? Well, it's a stylised image of a cowry shell, the jagged lines of the shell's opening having turned into straight lines throughout the millennia. So in the very written language, we can see that cowries were indeed a precious commodity in ancient China.
That was a good episode. I liked it. Something I'd not really thought of before with a very interesting tangent. Extra History is absolutely your strength guys, keep at it.
The most interesting part is that's cases like this, of people using intangible credit arrangements for transactions are not rare at all in the anthropological record, some argue that historically they've been more common than commodity based systems, You should check "Debt the first five thousand years" by David Graeber, he was an American anthropologists and in that book he describes a lot about cases like this, and argue for some interesting alternative monetary theories
If I remember right, many early societies would actually use credit for their neighbors and friends. People would keep track of who owed what and simply trust that they would pay when they could. Outsiders were the ones that paid up front.
This. The idea of a barter society bringing about a currency-based society has existed for a long time, but doesn't really have too much supporting evidence. The idea that a fisherman can't gift food to a farmer, expecting to one day be compensated, is ignoring history.
The video has got it wrong. Money was developed as a way of storing debt not to deal with the problems of bartering. Debt: The First 5,000 Years of DEBT by anthropologist David Graeber published in 2011 is the seminal study.
@@shakiMiki I've been meaning to read that book. The idea seems odd to me: how does money (something with value) store debt, instead? Could you give me a brief summary? Thanks! :)
Yay! I’m not the only one who noticed! “LISTEN YOU CRUSTACEOUS CHEAPSKATE! SQUIDWARD’S BEEN LIVING AT MY HOUSE DRIVING ME CRAZY. AND YOU’RE NOT GONNA HIRE HIM BACK ALL BECAUSE OF A STUPID DIME?!!!"
The stone circle system sounds like an amazing story and I love it, especially because it puts such a spin on money that makes me go 'wait why is this weird paper stuff our currency again?' It's great.
James talked about this one right after the South Seas story, and I have been waiting for it ever since. It is finally here. (Oh yeah and the Walpole ties should be good, too.)
If the gold was completely pure you actually could, but then you can't really use it as coinage. Also it would be confusing for what good to cut for half and sell on.
S&W went more in depth about stock trading and manipulation, and currencies was just mentioned in-passing. Still, a very good show that's worth watching.
@Eric houser: Reverse sexism? Isn't that just plain ol' sexism anyway? xD In any case, what exactly are you referring to. I'm a big fan of S&W myself and don't quite see what you're getting at.
"I will trade you 10 cows for.... your whole country, your life, your wife(s), 50 cows and ofc a link to never gonna give you up" Me: "Hmmmmmmmmmmm you sir have got yourself a deal"
Where a Yoshi Doll you won at a crane game is eventually worth as much as a new magic sword. ...Or something like that. I might be confusing my Zelda games here.
Yoshi doll to Magnifying Lens, that would be Links Awakening. The Noble Sword is the Oracle games, from a Cuccodex in seasons and from the Poe Clock in ages. No, I didn't remember either, I looked it up.
I'll hatch the egg to get the cucco to trade for a blue cucco to wake the man to bring the mushroom to be turned into powder that will be traded for the saw that will be exchanged for the broken hilt that cannot be fixed unless you bring the prescription to get the eyedrop frog that gets turned into eyedrops so the smith can recreate the sword in three days.
To expand on: Coincidence of wants (or lack thereof) only really becomes an issue in trade driving the necessity of an intermediary good of established value when the groups of people trading with each other become too large to all share intimate relationships. Within the realm of up to, say, 200 people, possibly slightly less but likely a fair bit more, each individual is indebted to many others within the community. eg "It's not an issue that George won't have grain to pay for my fish until the harvest season, because I know George and he's not going anywhere. So for now, I'll share my fish with George, and when the harvest comes George will share his grain with me." Trade systems only require an established staple when traders can no longer share close relationships and trust with each other. (When trade systems begin to expand beyond smaller communities) Thanks so much for making some awesome educational content, I love all this team's work so much! Ps to my etymologically inclined friends, you know why George is the farmer here!
I was surprised that they didn't address people's solution for the coincidence of wants before intermediary 'currency' started to exist. Just so everyone knows, people didn't sit around starving for thousands of years because they couldn't trade a fish for a corn in the winter. No, instead people developed a kind of credit system. So, a farmer who wants fish from the fisherman but doesn't have their harvest in yet would instead do favors for the fisherman which they would both agree amounted to the value of a fish. In fact, people would do these favors in advance, & simply keep track in their head who had done favors for who. So, maybe I need a fish & I had helped you rebuild your hut a few months ago after it was knocked down in a particularly bad storm. I could call upon the value of that favor & cash it in for a fish.
Exactly. Bartering as a precursor to currency is mostly a theory developed in the 18th century in Europe, with no actual evidence in the real world. Bartering became more common when Europeans traded with distant people in distant places that didn't have currency (or didn't accept gold/silver as currency).
On a side note, the bartering in North America basically treated the beaver pelt as a unit of exchange. Not a currency, but a common commodity to be measured against, so a lantern might be worth 3 pelts and a rifle worth 2. If I were trading you a lantern, I would expect more than just a rifle to account for that third pelt. Granted, when most people came into a frontier trading post on the Canadian frontier, they came to trade fur for supplies, so the rifle for lantern example wouldn't come up much.
This is just what I was thinking of. In fact, I remember seeing an anthropologist use this fact to set a hard limit on the size of pre-writing communities: if you can't personally know everyone you trade with on a regular basis, you can't remember who owes you what.
It's awesome to see the questions about barter coming up. I'm planning on talking about this in Lies, but how goods exchange worked before commodity currency is...contentious. And it doesn't help that Adam Smith sort of made up "Barter" since he comes with all sorts of baggage in the academic world. From what I've read, basically "gift exchange with haggling" seems like the most like origin point for exchange of goods, but that whole debate is waaaaay more than I had time to get into here. To give you another preview of Lies...when we get to the last episode you'll probably notice that this series ends right before the point in time where we'd be talking about the idea of the petrol-dollar...which is hugely important in the ongoing argument about whether we have a true "fiat" currency...and so also going to be covered in lies ; ) -JP
For the record, I would be just as interested, if not more interested, in the development of the petrodollar than the development of paper money. Really interesting subject.
Respectfully, I think you should consider the research of the Cambridge anthropologist Caroline Humphrey who tried and failed to find any real-world examples of barter economies. She wrote: “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money. All available ethnography suggests that there never has been such a thing.” That includes the ancient Greeks, Indians, and Chinese who independently invented coinage. And the idea that the Sumerians had a barter economy is inconsistent with your video on the origin of writing. I think it would make more sense to say that debt, credit, and a variety social and prestige currencies all existed on a continuum of what we today call money. And until any evidence of a barter economy arrives, we should consider it to be a myth.
I'd worry more about how it currently looks like you're promoting fiat currencies as a method of stealing purchasing power from people to fight larger wars? Let's face it most wars aren't good vs evil, and anything that kept them smaller, like people not wanting to waste their money on them, would be a good thing.
"How did humanity come to accept rectangular pieces of pulped trees as something to spend eight to ten hours a day working for?" When you put it that way..
I think it's great that you guys focus on these slightly less glamorous aspects of history, or histories of ideas, technologies, etc. rather than just the usual stuff (wars, battles, and the like). It's good to have some balance.
Hey, great episode as always. There is something you may want to look into for the "Lies" episode for this: the barter system, described by Adam Smith and used in many Economics classes to describe the history of money, may never have existed. For instance the esteemed anthropologist Caroline Humphrey wrote: "No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing" (Humphrey, qtd in Graeber, p.29). Graeber, David. (2011). Debt. New York: Melville House Publishing Humphrey, Caroline. (1985). Barter and Economic Disintegration. Man, 20(1), 48-72.
Hilariously, according to Wikipedia the Rai Stones (Yapanese currency) started as much more portable beads. They go so large when trade was established with outsiders and common metal tools made excavating the beads far too easy. So it was a way to stave off hyperinflation.
I just wanted to say that I'm taking a macroeconomics class and I watched your video long before I took this class. I find it really awesome that you use the exact terminology and make something that I probably would have had a problem conceptualizing into something easily digestible for me. THANK YOU!
You should read Debt by David Graeber, he refutes the prehistory of money being based on bartering since there is basically no historical evidence that societies worked on the strict satisfaction of coinciding wants until after the invention of money and coinage.
I want to say thank you! You really helped me with the outline of my uni assignment. I had to use some books too, but your video kick-started my work. Great video, keep up the great work!
On the subject of odd currencies -- my native New England was the source of one. Nutmeg. We weren't a source of nutmeg of course, but we were a source of Yankee peddlers, called Nutmeggers, large groups of itinerant wanderers plied the American backwoods trading small items and exploring, and always with a small package of the valuable spice tucked somewhere in their luggage. Early American cooks used nutmeg for everything so nutmeg seeds were in enough demand that a Yankee peddler could usually count on being able to trade them for the supplies he needed to continue his travels, or for a roof over his head if the weather turned bad. However, like with anything else, there was a problem, and the problem was counterfeiting. It says something about how valuable nutmeg was back then that there was a problem with counterfeit nutmeg, but there was -- nutmeg seeds carved out of wood, passed off to unscrupulous people who don't do their due dilligence on the good they're trading for. Eventually that, combined with some financial chicanery on the East Coast that's a story all by itself, was enough to collapse the nutmeg market, but because he happened so early in our history, the Yankee nutmegger still lingers around in the back of the national consciousness.
The high value on gold is arbitrary. It has actually very little intrinsic value, mostly in electronics and wiring. It is a poor tool metal, comparable to lead, has a high density and so weighs far more for comparable volume, meaning cumbersome and awkward to carry around. The only reason gold has such a high value is because people assign it a high value as a commonly traded third-party commodity, which is no different than assigning a high value to a piece of paper for the same reason. The only difference USED to be that you can always print more paper, but you can't just print gold. However, when devaluation became a thing, that argument went out the window.
Again, TARDIS - thanks! And the cowrie shell: I would have guessed a precious metal, also. I guess the cowrie was wider spread, but still sufficiently difficult to acquire. I'm glad cowries weren't hunted to extinction. And always I love the art, including the reference to Marvel's Havoc. :)
6:31 Don't you mean DEflation? Inflation is when the value of any unit of currency goes down, normally from the supply of money being higher than the demand. Deflation is when the value of any unit of currency goes UP, normally from the supply of money being lower than demand.
Of the gold/silver in the coin or the commodities they were intended to buy? Inflation of the gold/silver, deflation of the everything else bought with it.
+ShaiM182 do you mind elaborating? I'm legitimately interested. All their content suffers from oversimplification but I haven't caught anything (else) that's wrong. I definitely don't know much about this stuff though.
I had a test this spring about the development and use of money and so, I sought out videos to try to help myself make sense of the big picture. I'm so glad I came upon this video because now, I've watched every extra history series you've put out.
The "barter" economy described in the opening section of the video never really existed, because of the problems described. What did exist is now called a "gift" economy. I have these fish and I give them to you...later you have that grain and you give some to me. Ultimately the medium of exchange was status. If I give more than I get, I am seen as higher status. Paul Ryan would call me a "maker." However, status only counts among people you know, so there is a need for a medium of exchange that would be recognized across a wider group.
Isaiah Gilliland I am pretty sure he did and that the "we" he refers to being a part of aren't economists, but more likely anthropologists. For the purpose of the exchange the status of being seen as wealthy enough to be able to wait for payment is a by product of the exchange and not an intrinsic element of it. A true "gift" economy would allow you to gift the fish to the farmer and then have other people then gift to you in recognition of your generosity in turn without expecting payment. A trade involving the exchange of goods and services for a transfer of social status.Like being able to use up votes and likes to buy a car. This is better known as philanthropy and for a number of reasons isn't a sustainable economic model.
Surma Sampo "Gift economy" is what the sociologists call it. It's not something I made up. The "Barter economy" is something that 18th century economists assumed must have happened; however, currently available evidence suggests that there never really was such a thing. Also it was not philanthropy, it was more on the order of incurring a debt/someone owing you a favor. It's really not all that hard to keep track of within a fairly small group of people. And if you are a net provider, then you gain status, which has a value all its own. You can assert that it isn't a sustainable economy, but it seems that it managed to sustain for thousands of years.
Alright so I went from oversimplified to fun stories to fun bureaucracy to fun things in science to actually important things to here. Man, hoi4 opens up so many opportunities
If we are all equal from the beginning of government, why does some people call themselves the government and not see everyone as equal ? These set of people who call themselves the government make citizens work for money, and they (government) just get the money whenever they want . Have you asked yourself this simple question ?
I'm not sure about the early part on Coincidence of Wants. Historic consensus for a goodly while (Based on anthropological research of contemporary groups) has shewn that 'barter trade' as discussed only existed between two sets of foreigners, or in situations where mistrust had occurred. the bulk of trade in 'primitive societies' used favours, debts and other forms of social capital as 'money'. Monetary tokens as described in the second part (after 3:20) were the eventual quantification and simplification of this complex favour-nexus.
My question is, how do you make change for a shell? For coins, you can just make a smaller coin for a lesser denomination, but with shells, you're stuck with a single denomination for each. Same with cattle - do you make change in calves?
I'd imagine that either change would be made in lesser goods ("I'm not willing to give up a whole cow just for that nice dress...throw in that necklace over there and we're good") or just ignored. A good number of pre-currency societies were composed of a small number of people who all knew and (hence) trusted each other, in a way that tribes and cities with population in the tens of thousands couldn't.
This problem basically persists until you include electronic currency. There always will be a smallest possible unit of currency, whether that is a cattle, a shell or a penny, if you wanted to purchase something which has less value than that, you are gonna have some problems. Sure if you do have coinage of sorts you could make a smaller unit but at some point it starts to get unreasonable (not enough use cases, too heavy for its worth, too expensive to produce). Think of something you need to buy nowadays that is actually very cheap (per unit): Electricity. You can get a Joule of electrical Energy for less than a cent, so how do things work: you just pay for the larger amount of electricity you need for a year. The same principle could be applied to different trades aswell (though I am not a historian,so I am not certain what the actual practice was)
TheRezro "No. Electronic replaced paper as data storage but it is still this same." In theory there is no problem in paying 0.00001 cents in electronic currency, in fact most cases of interest are calculated way more accurately than to the cent, they are then rounded. Electronic currency does solve the problems of having distinc money sizes, because it is both easy and inexpensive to portray a smaller amount of money. In the second part I was trying for a parallel between, I need potatoes, but all I have is a cow and something that is a more usual comparison with modern monetary means. As you have pointed out the advantages of electronic currency do show. I never intended to suggest electricity as an alternative form of currency (it would be aweful at that)
Not exactly. Electronic currency still has limited precision as you don't have proper Real Numbers in a computer but just an approximation to a certain degree of precision. The problem is the same as with regular currency, gold backed or not. You have to break it down small enough that nobody cares. It is only that doing so by increasing the precision of your number representation in the accounting software is much more easier and cheaper than making smaller physical currency units. But modern currencies are actually already subdivided to much for the most use cases. In both € and $ the single cent coin denominates less than the production costs and is too much hassle to use for people to care. Hence the initiatives to abolish pennies and round up to the next 0,05 $/€. Electronic currency gets away with higher precision but there is also a practical limit at which the rounding errors are just let be.
I always thought that the "cowrie shells" used as currency in Mata Nui Online Game 2 were just some made up currency. Turns out some clever designer knew about real life cowry shells. :P
Maybe it's the type that you burn on both ends and have the ember in your mouth? My great grandmother used to smoke them (She lived to over a hundred. Take THAT, surgeon general!).
Heather McNabb haha, i didn't imagine the animator herself would comment on this. Anyway you're doing aa great job here, with some minor errors like this one. But hey, see it as something personal. An animator can only draw what he or she knows right?
I'm glad you guys decided to do this episode. The current monetary system is broken, and it's broken everywhere. Looking back on exactly how it came to be is an important step in trying to fix it.
Alright I give you one twentieth of my cow for your hat and i'll save up the other part of the cow for future purchases! It might have been nice if the video mentioned how coins made of precious metals are easily dividable and how the stamp on it is a government guarantee of metal content.
Hrm. I always got the impression that the 'barter economy' thing was more of a modern myth/retcon and currencies were something that came about in order to facilitate taxation.
Their imagination. The easiest example for most western people to find is in the Torah where taxes where paid to the church in goods. Also there are many documented instances of standard commodity currency like cows, shells, grain, salt, etc, that feature in numerous barter systems. Fun fact is that writing was invented to track and manage taxes, that's right human created writing so that reliable tax accounting could be done, not to keep histories or facilitate artistic expression.
Well, one pop science example would be: www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/ Over the years, pretty much every anthropologist I have talked to has been annoyed at how wrong the common images of early civilization are. The image of the 'barter economy' came out of people pushing capitalistic systems wanting to contrast their improvement yet highlight how fundamental the thing they are addressing is. It was the economic equiv of the raw food or paleo diet.
neeneko So, I hate to tell you but all the descriptive tools used to explains systems of trade or exchange in econ 101 are crude models. Economics doesn't care about the various cultural trappings around the exchange and the "gift" economy or status economy is a feature of communism or communal ownership of production. The fisherman gives the fish because that is his role within the community to be able be part of the community and benefit from it's collective efforts. It doesn't matter if barter only occurred between communities rather than within them or if there where rituals involved. Also the idea that transference of debt isn't a feature of barter is nonsense. Anthropologists in this article are presenting a straw man because they don't unde4rstand the discipline, and it should be noted that barter still occurs today, even between large corporations.
I am not sure how accurate this is, but I heard a bunch of places that it was and still is actually far more common in a moneyless societies to be based on informal ideas of credit, not trade or bartering. Or at least not just trade or bartering. You know more like a "you do x for me or give me x and I will owe you compensation or a favor" type of deal. Still functionally the same thing I guess, and caused money to develop for much the same reasons, but trade or bartering implies directly handing over something for something else all the time. In reality I think it's more likely in your fisherman and farmer situation for example for the fisherman to just give away the extra fish with the excitation of getting something later.
The coincidence of wants is a very out of date model of how currency came about. This video is already 20 years out of date, no one in economics seriously still thinks that THIS is how we came to use coinage. This fictional village full of people trying to trade apples for axes never existed, it is only found in the opening pages of old economics textbooks.
I'm really surprised by this. This isn't even something you'd want to correct in the lies, it's just false. Like, the debt & trust based economy isn't more complicated to explain than the coincidence of wants (I'd say it's simpler, in fact) and it's just not how thing took place, as far as we are able to tell. For once, it's a case of Extra history not reading further than the first pages of a subject, not even a recent one. It's just an introduction, so it's not the biggest deal, but still.
I love the opener. Money only has the value we give it. It's not rare or special, it's everywhere. But somehow, one piece of paper with different printing has more worth than the same type of paper, with just a few less zeroes. Strange.
This video is incorrect. For local trade, the solution was not money but instead a ledger. A ledger served as a way to keep track of local trade and balance the books for over 10 thousand years before currency came into the picture. Money came from long distance trade, specifically militaries that needed to eat when traveling long distances. They could not buy food with a ledger, because a ledger requires the other person come back and equal the trade 6 or 12 months later. The ledger system did not facilitate trust amongst strangers. Until currency appeared, long distance trades were rare, and an offensive military was nearly unheard of.
Oh dear. I was afraid that the barter theory of how trade used to be conducted would come up. Recent research has shown that credit was used rather than barter for early trade ("you give me fish now and I'll give you apples in autumn"). Even worse you tried to define money, which is something on which economists can never agree, and used the definition that money is "a third good that doesn't spoil and that we all agree has value." If people accept that definition, then they'll struggle with understanding today's money. It would be better to say that money is an information system for tradible claims on wealth."
The vending machines on the island of Yap must be ENORMOUS!
Lol
You are so right
Just think of the size of the gumball dispensers.
@@kzrockstar9717 Huge coins, small balls
Pfff... those crustaceous cheapskates......
Fun fact, the Chinese character 貝 that means something precious are part of a lot of compound characters related to trade and finance like 賬 "account" 資 "capital" 財 "wealth" 賦 "tax" 費 "expenses" 買 "to buy". And what is 貝 exactly? Well, it's a stylised image of a cowry shell, the jagged lines of the shell's opening having turned into straight lines throughout the millennia. So in the very written language, we can see that cowries were indeed a precious commodity in ancient China.
The use of cowrie shells was so wide that the word "money" comes from latin "moneta" which indicated a type of cowrie
The more you know
No wonder China is still Capitalist.
@@r7ahtesham885 no one will ever say no to less money
STFU
That was a good episode. I liked it. Something I'd not really thought of before with a very interesting tangent. Extra History is absolutely your strength guys, keep at it.
I'm kinda late here but. Hi SovietWomble! I also love your videos! Hahaha
Badgers
SovietWomble where did you come from!
waaaaaaaaaaaaaaaait. Amazing.
Wtd
The fact they counted the stone at the bottom of the ocean is awesome
They shouldn't. It is Mr. Krabs' first penny now.
The most interesting part is that's cases like this, of people using intangible credit arrangements for transactions are not rare at all in the anthropological record, some argue that historically they've been more common than commodity based systems, You should check "Debt the first five thousand years" by David Graeber, he was an American anthropologists and in that book he describes a lot about cases like this, and argue for some interesting alternative monetary theories
I mean, some people drink their paychecks away, but this takes it to a new level
I pay people sometimes in beer.
I've heard of some people in USSR/Russia being paid in alcohol, kind of doubt that but then again it's Russia so maybe it's true
Isn’t there a spongebob joke about Mr Krab’s first dime being a giant limestone coin
yeah
He’s been in business a long time.
Oh yeah... it's all coming together...
If I remember right, many early societies would actually use credit for their neighbors and friends. People would keep track of who owed what and simply trust that they would pay when they could. Outsiders were the ones that paid up front.
Yes!
This. The idea of a barter society bringing about a currency-based society has existed for a long time, but doesn't really have too much supporting evidence. The idea that a fisherman can't gift food to a farmer, expecting to one day be compensated, is ignoring history.
***cough**thisvideoshaftedavidgraeber***cough****
The video has got it wrong. Money was developed as a way of storing debt not to deal with the problems of bartering. Debt: The First 5,000 Years of DEBT by anthropologist David Graeber published in 2011 is the seminal study.
@@shakiMiki I've been meaning to read that book. The idea seems odd to me: how does money (something with value) store debt, instead? Could you give me a brief summary? Thanks! :)
4:14 - 4:19
"This is a dime??"
"I've been in business a long time, boy."
Lol that took me a second to figure that out
Yay! I’m not the only one who noticed!
“LISTEN YOU CRUSTACEOUS CHEAPSKATE! SQUIDWARD’S BEEN LIVING AT MY HOUSE DRIVING ME CRAZY. AND YOU’RE NOT GONNA HIRE HIM BACK ALL BECAUSE OF A STUPID DIME?!!!"
@Age Restrictions What's that?
Salt was money. The more salt you had, the richer you were, cause salt was really hard to find. The word salary came from salt.
A time when being salty was a good thing
Not in most places only the saltless ones.
@Hell Fire3 he just asked for a source lol
Dude.. I could have been a millionaire by now... damnit
and there's a saying “worth its weight in salt" for the value of something, related to your info
The stone circle system sounds like an amazing story and I love it, especially because it puts such a spin on money that makes me go 'wait why is this weird paper stuff our currency again?'
It's great.
James talked about this one right after the South Seas story, and I have been waiting for it ever since. It is finally here.
(Oh yeah and the Walpole ties should be good, too.)
I wonder if they'll only do the one.
They always are. ;)
Who's walpole
I have my own theory about why we switched to paper money : you cannot roll gold to form a straw to take cocaine.
Sounds like the mentality of a quitter
Well, if you try hard enough ...
That sounds frighteningly plausible.
I mean, pure gold is pretty malleable right?
If the gold was completely pure you actually could, but then you can't really use it as coinage.
Also it would be confusing for what good to cut for half and sell on.
I think the anime "spice and wolf" did a good job at explaining this economy stuff.
S&W went more in depth about stock trading and manipulation, and currencies was just mentioned in-passing. Still, a very good show that's worth watching.
It did an even better job of illustrating reverse sexism too.
The anime C also touched on some of these concepts.
Still waiting for season 3..
@Eric houser: Reverse sexism? Isn't that just plain ol' sexism anyway? xD In any case, what exactly are you referring to. I'm a big fan of S&W myself and don't quite see what you're getting at.
"I will trade you 10 cows for.... your whole country, your life, your wife(s), 50 cows and ofc a link to never gonna give you up"
Me: "Hmmmmmmmmmmm you sir have got yourself a deal"
1:48 I laughed out loud at that "if I don't want you stupid food".
It was so unecessary and out of nowhere hahah
Barter-system == video-game fetch quest
Where a Yoshi Doll you won at a crane game is eventually worth as much as a new magic sword. ...Or something like that. I might be confusing my Zelda games here.
Yoshi doll to Magnifying Lens, that would be Links Awakening. The Noble Sword is the Oracle games, from a Cuccodex in seasons and from the Poe Clock in ages.
No, I didn't remember either, I looked it up.
My thoughts exactly.
*****
Thanks for reminding me. It's been around 7 to 10 years, I think, since I last played the Oracle games. XD
I'll hatch the egg to get the cucco to trade for a blue cucco to wake the man to bring the mushroom to be turned into powder that will be traded for the saw that will be exchanged for the broken hilt that cannot be fixed unless you bring the prescription to get the eyedrop frog that gets turned into eyedrops so the smith can recreate the sword in three days.
“You could literally drink your paycheck” 🤣
dude i was looking to see if anyone else has been gotten by that, i had to stop the video until i was finished i was so hysterical.
liquefied assests
@Rayan Assouli wowwowwowdfx
@Rayan Assouli you send the request if you want to firend
You could literally piss away your bonus
I like your content
Ah yes a video about money
who doesnt
Just gotta say, EC is a really fun series. You do a great job at creating a not-as-simple-as-it-sounds narrative by addressing just the right points.
To expand on: Coincidence of wants (or lack thereof) only really becomes an issue in trade driving the necessity of an intermediary good of established value when the groups of people trading with each other become too large to all share intimate relationships. Within the realm of up to, say, 200 people, possibly slightly less but likely a fair bit more, each individual is indebted to many others within the community. eg "It's not an issue that George won't have grain to pay for my fish until the harvest season, because I know George and he's not going anywhere. So for now, I'll share my fish with George, and when the harvest comes George will share his grain with me."
Trade systems only require an established staple when traders can no longer share close relationships and trust with each other. (When trade systems begin to expand beyond smaller communities)
Thanks so much for making some awesome educational content, I love all this team's work so much!
Ps to my etymologically inclined friends, you know why George is the farmer here!
I was surprised that they didn't address people's solution for the coincidence of wants before intermediary 'currency' started to exist. Just so everyone knows, people didn't sit around starving for thousands of years because they couldn't trade a fish for a corn in the winter. No, instead people developed a kind of credit system.
So, a farmer who wants fish from the fisherman but doesn't have their harvest in yet would instead do favors for the fisherman which they would both agree amounted to the value of a fish. In fact, people would do these favors in advance, & simply keep track in their head who had done favors for who.
So, maybe I need a fish & I had helped you rebuild your hut a few months ago after it was knocked down in a particularly bad storm. I could call upon the value of that favor & cash it in for a fish.
Yes!
Exactly. Bartering as a precursor to currency is mostly a theory developed in the 18th century in Europe, with no actual evidence in the real world.
Bartering became more common when Europeans traded with distant people in distant places that didn't have currency (or didn't accept gold/silver as currency).
On a side note, the bartering in North America basically treated the beaver pelt as a unit of exchange. Not a currency, but a common commodity to be measured against, so a lantern might be worth 3 pelts and a rifle worth 2. If I were trading you a lantern, I would expect more than just a rifle to account for that third pelt.
Granted, when most people came into a frontier trading post on the Canadian frontier, they came to trade fur for supplies, so the rifle for lantern example wouldn't come up much.
This is just what I was thinking of. In fact, I remember seeing an anthropologist use this fact to set a hard limit on the size of pre-writing communities: if you can't personally know everyone you trade with on a regular basis, you can't remember who owes you what.
Darkar Dengeno Was that in a UA-cam video? If it was, would you please link to it? I'd like to see what they have to say.
Why let bankruptcy get in the way of a good crusade?
lol
Ikr, just print more money.
~ Federal reserve
It's awesome to see the questions about barter coming up. I'm planning on talking about this in Lies, but how goods exchange worked before commodity currency is...contentious. And it doesn't help that Adam Smith sort of made up "Barter" since he comes with all sorts of baggage in the academic world. From what I've read, basically "gift exchange with haggling" seems like the most like origin point for exchange of goods, but that whole debate is waaaaay more than I had time to get into here.
To give you another preview of Lies...when we get to the last episode you'll probably notice that this series ends right before the point in time where we'd be talking about the idea of the petrol-dollar...which is hugely important in the ongoing argument about whether we have a true "fiat" currency...and so also going to be covered in lies ; )
-JP
For the record, I would be just as interested, if not more interested, in the development of the petrodollar than the development of paper money. Really interesting subject.
Respectfully, I think you should consider the research of the Cambridge anthropologist Caroline Humphrey who tried and failed to find any real-world examples of barter economies. She wrote: “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money. All available ethnography suggests that there never has been such a thing.” That includes the ancient Greeks, Indians, and Chinese who independently invented coinage. And the idea that the Sumerians had a barter economy is inconsistent with your video on the origin of writing.
I think it would make more sense to say that debt, credit, and a variety social and prestige currencies all existed on a continuum of what we today call money. And until any evidence of a barter economy arrives, we should consider it to be a myth.
Sounds like someone may've read "Debt: The First 5,000 Years". :D
I'd worry more about how it currently looks like you're promoting fiat currencies as a method of stealing purchasing power from people to fight larger wars? Let's face it most wars aren't good vs evil, and anything that kept them smaller, like people not wanting to waste their money on them, would be a good thing.
+Frank JohnsonIn war you fight to win and you use any means at your disposal to do so including money.
"How did humanity come to accept rectangular pieces of pulped trees as something to spend eight to ten hours a day working for?"
When you put it that way..
well i mean like uuhh
to pay bank's debt and pay you bills
Best intro everrrr !!
I did a dbq yesterday and it was about silvers political and economical effects on the world and i talked about inflation.
I feel smart now
I think it's great that you guys focus on these slightly less glamorous aspects of history, or histories of ideas, technologies, etc. rather than just the usual stuff (wars, battles, and the like). It's good to have some balance.
Is it just me or that picture of Dan with a formal hairstyle looks really neat?
He looks Dapper.
thats brave in dutch
robin van Sint Annaland The language that's so hard even Germans are like "Fuck no."
If you remove Dan's bow, he looks surprisingly similar to Kraft Lawrence from Spice and Wolf.....
Blake 81 That would be amazing.
This brings me back to my economics class. Except much better told, well done!
Hey, great episode as always.
There is something you may want to look into for the "Lies" episode for this: the barter system, described by Adam Smith and used in many Economics classes to describe the history of money, may never have existed. For instance the esteemed anthropologist Caroline Humphrey wrote: "No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money; all available ethnography suggests that there never has been such a thing" (Humphrey, qtd in Graeber, p.29).
Graeber, David. (2011). Debt. New York: Melville House Publishing
Humphrey, Caroline. (1985). Barter and Economic Disintegration. Man, 20(1), 48-72.
"and no, it's not gold"
Haha, I'm smart. I know it's salt.
"It's the cowrie shell"
WHAT?
Hilariously, according to Wikipedia the Rai Stones (Yapanese currency) started as much more portable beads. They go so large when trade was established with outsiders and common metal tools made excavating the beads far too easy. So it was a way to stave off hyperinflation.
This episode is why I love Extra History
So that's how mr.krabs got his 1st dime
Donutgames00 lol
I just wanted to say that I'm taking a macroeconomics class and I watched your video long before I took this class. I find it really awesome that you use the exact terminology and make something that I probably would have had a problem conceptualizing into something easily digestible for me. THANK YOU!
You should read Debt by David Graeber, he refutes the prehistory of money being based on bartering since there is basically no historical evidence that societies worked on the strict satisfaction of coinciding wants until after the invention of money and coinage.
I want to say thank you! You really helped me with the outline of my uni assignment. I had to use some books too, but your video kick-started my work.
Great video, keep up the great work!
I love how you use RDR to represent a “lawless land”
On the subject of odd currencies -- my native New England was the source of one. Nutmeg. We weren't a source of nutmeg of course, but we were a source of Yankee peddlers, called Nutmeggers, large groups of itinerant wanderers plied the American backwoods trading small items and exploring, and always with a small package of the valuable spice tucked somewhere in their luggage. Early American cooks used nutmeg for everything so nutmeg seeds were in enough demand that a Yankee peddler could usually count on being able to trade them for the supplies he needed to continue his travels, or for a roof over his head if the weather turned bad.
However, like with anything else, there was a problem, and the problem was counterfeiting. It says something about how valuable nutmeg was back then that there was a problem with counterfeit nutmeg, but there was -- nutmeg seeds carved out of wood, passed off to unscrupulous people who don't do their due dilligence on the good they're trading for. Eventually that, combined with some financial chicanery on the East Coast that's a story all by itself, was enough to collapse the nutmeg market, but because he happened so early in our history, the Yankee nutmegger still lingers around in the back of the national consciousness.
Lol @ the dragon sitting on the gold because it's a draconian concept. 😂
I’m so happy to have found this channel! I’m going to be using these in my homeschool lessons. These look a lot like Spirit Science. I love it!
Awesome idea to put a Smaug reference there!
Oh no, I can hear the gold standard people rushing in already.
Aaaaaaaand they're here
Why let a little shortage get in the way of a good gold standard?
No...
Sliced bread Standard's where it's at!
I love them. They refuse the idea of giving imaginary value to pieces of paper in favour of giving imaginary value to pieces of metal.
The high value on gold is arbitrary. It has actually very little intrinsic value, mostly in electronics and wiring. It is a poor tool metal, comparable to lead, has a high density and so weighs far more for comparable volume, meaning cumbersome and awkward to carry around.
The only reason gold has such a high value is because people assign it a high value as a commonly traded third-party commodity, which is no different than assigning a high value to a piece of paper for the same reason. The only difference USED to be that you can always print more paper, but you can't just print gold. However, when devaluation became a thing, that argument went out the window.
This helped me a lot since I just started studying Economics! Thanks Extra History!
Animations on every presentation on this channel is so much to the point that it requires no imagination and it's self explanatory.
Again, TARDIS - thanks! And the cowrie shell: I would have guessed a precious metal, also. I guess the cowrie was wider spread, but still sufficiently difficult to acquire. I'm glad cowries weren't hunted to extinction. And always I love the art, including the reference to Marvel's Havoc. :)
6:31
Don't you mean DEflation?
Inflation is when the value of any unit of currency goes down, normally from the supply of money being higher than the demand. Deflation is when the value of any unit of currency goes UP, normally from the supply of money being lower than demand.
there is so many things wrong here... it's hard to focus just on one thing.
______/
Move feet away
I'm pretty sure inflation because they're making so much alternate money like paper money to where inflation occurs
Of the gold/silver in the coin or the commodities they were intended to buy?
Inflation of the gold/silver, deflation of the everything else bought with it.
+ShaiM182 do you mind elaborating? I'm legitimately interested. All their content suffers from oversimplification but I haven't caught anything (else) that's wrong. I definitely don't know much about this stuff though.
4:46 - 4:54
Well, that just made shell-collecting in Animal Crossing make a lot more sense all of a sudden.
"Oh, how will I pay?
I've got one donut rock at the bottom of the sea. It's your's now"
SO CUT AND CLEAR IN THE EXPLANATION.. SO GOOD FOR ANYONE TO UNDERSTAND
The fact that you can makr a whole series is even better
I had a test this spring about the development and use of money and so, I sought out videos to try to help myself make sense of the big picture. I'm so glad I came upon this video because now, I've watched every extra history series you've put out.
The "barter" economy described in the opening section of the video never really existed, because of the problems described. What did exist is now called a "gift" economy. I have these fish and I give them to you...later you have that grain and you give some to me. Ultimately the medium of exchange was status. If I give more than I get, I am seen as higher status. Paul Ryan would call me a "maker." However, status only counts among people you know, so there is a need for a medium of exchange that would be recognized across a wider group.
So you are arguing that deferment of payment, often according to terms set at the time the barter transaction is made, makes it not barter?
No he didn't say that.
Isaiah Gilliland
I am pretty sure he did and that the "we" he refers to being a part of aren't economists, but more likely anthropologists. For the purpose of the exchange the status of being seen as wealthy enough to be able to wait for payment is a by product of the exchange and not an intrinsic element of it.
A true "gift" economy would allow you to gift the fish to the farmer and then have other people then gift to you in recognition of your generosity in turn without expecting payment. A trade involving the exchange of goods and services for a transfer of social status.Like being able to use up votes and likes to buy a car.
This is better known as philanthropy and for a number of reasons isn't a sustainable economic model.
Surma Sampo "Gift economy" is what the sociologists call it. It's not something I made up. The "Barter economy" is something that 18th century economists assumed must have happened; however, currently available evidence suggests that there never really was such a thing.
Also it was not philanthropy, it was more on the order of incurring a debt/someone owing you a favor. It's really not all that hard to keep track of within a fairly small group of people. And if you are a net provider, then you gain status, which has a value all its own.
You can assert that it isn't a sustainable economy, but it seems that it managed to sustain for thousands of years.
And they mention that offhand. In small communities that works, but it doesn't scale.
"join us next as we-" AAAARGH MUST I WAIT?!
Don't know why but I watch this whole series atleast once every few months
Alright so I went from oversimplified to fun stories to fun bureaucracy to fun things in science to actually important things to here.
Man, hoi4 opens up so many opportunities
7:33 wow, this is the first time i have ever heard someone acknowledge this fact
If we are all equal from the beginning of government, why does some people call themselves the government and not see everyone as equal ? These set of people who call themselves the government make citizens work for money, and they (government) just get the money whenever they want . Have you asked yourself this simple question ?
3:47
Mr. Krabs's first dime!
I loved the fact that the infographic at 3:13 used teeth as an example of possible money. Makes the Ork fan in me proud.
I'm normally too poor to care about economics but you guys are entertaining enough that I'll keep watching
I'm not sure about the early part on Coincidence of Wants. Historic consensus for a goodly while (Based on anthropological research of contemporary groups) has shewn that 'barter trade' as discussed only existed between two sets of foreigners, or in situations where mistrust had occurred. the bulk of trade in 'primitive societies' used favours, debts and other forms of social capital as 'money'. Monetary tokens as described in the second part (after 3:20) were the eventual quantification and simplification of this complex favour-nexus.
"Is that (toilet)paper?" LOL
My question is, how do you make change for a shell? For coins, you can just make a smaller coin for a lesser denomination, but with shells, you're stuck with a single denomination for each. Same with cattle - do you make change in calves?
Carried credit, actually. Crash Course did a piece on credit and barter in their second world history series
I'd imagine that either change would be made in lesser goods ("I'm not willing to give up a whole cow just for that nice dress...throw in that necklace over there and we're good") or just ignored. A good number of pre-currency societies were composed of a small number of people who all knew and (hence) trusted each other, in a way that tribes and cities with population in the tens of thousands couldn't.
This problem basically persists until you include electronic currency. There always will be a smallest possible unit of currency, whether that is a cattle, a shell or a penny, if you wanted to purchase something which has less value than that, you are gonna have some problems. Sure if you do have coinage of sorts you could make a smaller unit but at some point it starts to get unreasonable (not enough use cases, too heavy for its worth, too expensive to produce). Think of something you need to buy nowadays that is actually very cheap (per unit): Electricity. You can get a Joule of electrical Energy for less than a cent, so how do things work: you just pay for the larger amount of electricity you need for a year. The same principle could be applied to different trades aswell (though I am not a historian,so I am not certain what the actual practice was)
TheRezro
"No. Electronic replaced paper as data storage but it is still this same."
In theory there is no problem in paying 0.00001 cents in electronic currency, in fact most cases of interest are calculated way more accurately than to the cent, they are then rounded. Electronic currency does solve the problems of having distinc money sizes, because it is both easy and inexpensive to portray a smaller amount of money.
In the second part I was trying for a parallel between, I need potatoes, but all I have is a cow and something that is a more usual comparison with modern monetary means. As you have pointed out the advantages of electronic currency do show. I never intended to suggest electricity as an alternative form of currency (it would be aweful at that)
Not exactly. Electronic currency still has limited precision as you don't have proper Real Numbers in a computer but just an approximation to a certain degree of precision. The problem is the same as with regular currency, gold backed or not. You have to break it down small enough that nobody cares. It is only that doing so by increasing the precision of your number representation in the accounting software is much more easier and cheaper than making smaller physical currency units. But modern currencies are actually already subdivided to much for the most use cases. In both € and $ the single cent coin denominates less than the production costs and is too much hassle to use for people to care. Hence the initiatives to abolish pennies and round up to the next 0,05 $/€. Electronic currency gets away with higher precision but there is also a practical limit at which the rounding errors are just let be.
I love the idea of people in Yap arguing about the value of physical stone circles and semi-imaginary underwater fiat stone circles.
I haven't thought about this aspect of economics in forever! This was fantastic, great video!
When he says that so much silver ended up in China, it caused inflation in Europe, shouldn't that be deflation?
Only if the Europeans were using silver as money.
You, my friend, are asking the correct questions. I enjoy this channel, but I still verify all content.
I always thought that the "cowrie shells" used as currency in Mata Nui Online Game 2 were just some made up currency. Turns out some clever designer knew about real life cowry shells. :P
3:34 -- why is that guy burning the filter of his cancer stick?
The better to get cancer from it.
probably drawn by someone who doesn't smoke. XD
Maybe it's the type that you burn on both ends and have the ember in your mouth? My great grandmother used to smoke them (She lived to over a hundred. Take THAT, surgeon general!).
You guys caught me- not only don't I smoke, but don't even know anyone who does so...mistake there
Heather McNabb haha, i didn't imagine the animator herself would comment on this. Anyway you're doing aa great job here, with some minor errors like this one. But hey, see it as something personal. An animator can only draw what he or she knows right?
Finally! Now I'll have a convenient answer for all those people who want to switch the dollar back over to gold! Best link ever!
Allonsy Extra History! :D
I would like to donate a hyphen
+Mark Mayonnaise and ill buy a vowel
LevelUpGaming Why? And I would like to donate an apostrophe.
Sometimes I hear paper money and I'm like "what? We use plas- oh, right I'm Canadian.
True trash same for us in Australia
can you do a video on the history of banking pleasee !! it's just the whole process of banking is blurry in my mind
I recommended you guys to my social studies teacher and he has not got back to me but I know he'll enjoy
I'm glad you guys decided to do this episode.
The current monetary system is broken, and it's broken everywhere.
Looking back on exactly how it came to be is an important step in trying to fix it.
Alright I give you one twentieth of my cow for your hat and i'll save up the other part of the cow for future purchases!
It might have been nice if the video mentioned how coins made of precious metals are easily dividable and how the stamp on it is a government guarantee of metal content.
Hrm. I always got the impression that the 'barter economy' thing was more of a modern myth/retcon and currencies were something that came about in order to facilitate taxation.
Their imagination. The easiest example for most western people to find is in the Torah where taxes where paid to the church in goods. Also there are many documented instances of standard commodity currency like cows, shells, grain, salt, etc, that feature in numerous barter systems. Fun fact is that writing was invented to track and manage taxes, that's right human created writing so that reliable tax accounting could be done, not to keep histories or facilitate artistic expression.
The Illuminati did it! AAAAAAAAAAAAAAAHHHHHHHHHHH!
Well, one pop science example would be:
www.theatlantic.com/business/archive/2016/02/barter-society-myth/471051/
Over the years, pretty much every anthropologist I have talked to has been annoyed at how wrong the common images of early civilization are. The image of the 'barter economy' came out of people pushing capitalistic systems wanting to contrast their improvement yet highlight how fundamental the thing they are addressing is. It was the economic equiv of the raw food or paleo diet.
neeneko
So, I hate to tell you but all the descriptive tools used to explains systems of trade or exchange in econ 101 are crude models. Economics doesn't care about the various cultural trappings around the exchange and the "gift" economy or status economy is a feature of communism or communal ownership of production. The fisherman gives the fish because that is his role within the community to be able be part of the community and benefit from it's collective efforts. It doesn't matter if barter only occurred between communities rather than within them or if there where rituals involved.
Also the idea that transference of debt isn't a feature of barter is nonsense.
Anthropologists in this article are presenting a straw man because they don't unde4rstand the discipline, and it should be noted that barter still occurs today, even between large corporations.
Speaking as someone who works with economic models for a living, I found their understanding to be just fine for the narrative they were addressing.
7:15 the gold inflation in Spain myth is debunked a decade ago. Yes there was an inflation, but not at such a big scale.
Favorite series so far
So the "Coincidence of Wants" is basically the basis for all video game fetch quests? Awesome!
When you already knew about this stuff because your a history nerd, and you accidentally found stuff about money and just kept going.
Que buen vídeo, me sirvió un montón!!, que bueno que esta en español y la traducción esta excelente.
3:36 almost made me puke. Only smokers will know why.
I don't smoke, but I know which end the filter is on.
...we've all done it (smokers) at least once, lol. It's enough to make you give up altogether (though it likely won't) xD
I Have Learn More Watching This Channel Then In All The Year Of School I Have Been To
Money is paper so priceless
There exists a counter argument that credit has a longer history then commodity money.
0:07 they didn't they accepted linen as a something to work for (u.s money is partly made of linin)
Gold is money, dollars are debt
Gotta love our ones and zeroes!
I am not sure how accurate this is, but I heard a bunch of places that it was and still is actually far more common in a moneyless societies to be based on informal ideas of credit, not trade or bartering. Or at least not just trade or bartering. You know more like a "you do x for me or give me x and I will owe you compensation or a favor" type of deal.
Still functionally the same thing I guess, and caused money to develop for much the same reasons, but trade or bartering implies directly handing over something for something else all the time. In reality I think it's more likely in your fisherman and farmer situation for example for the fisherman to just give away the extra fish with the excitation of getting something later.
4:02
Mr. Krabbs's first dime he earned was a limestone donut.
that's cool
The coincidence of wants is a very out of date model of how currency came about. This video is already 20 years out of date, no one in economics seriously still thinks that THIS is how we came to use coinage. This fictional village full of people trying to trade apples for axes never existed, it is only found in the opening pages of old economics textbooks.
Seriously! Argh!
I'm really surprised by this. This isn't even something you'd want to correct in the lies, it's just false. Like, the debt & trust based economy isn't more complicated to explain than the coincidence of wants (I'd say it's simpler, in fact) and it's just not how thing took place, as far as we are able to tell.
For once, it's a case of Extra history not reading further than the first pages of a subject, not even a recent one. It's just an introduction, so it's not the biggest deal, but still.
So what is the new belief?
tell us what's the up to date model don't just tell us that this one is out of date and run away, SIT DOWN AND TEACH ME EVERYTHING RIGHT NOW!!!
So... basically communism?
3:34 He's smoking his cigarette backwards...
ThePooper3000 no u
Doesnt matter
You know that you're making great content when you start to crave educational videos
I love the opener. Money only has the value we give it. It's not rare or special, it's everywhere. But somehow, one piece of paper with different printing has more worth than the same type of paper, with just a few less zeroes. Strange.
4:56 enemy sniper inbound
This video is incorrect. For local trade, the solution was not money but instead a ledger. A ledger served as a way to keep track of local trade and balance the books for over 10 thousand years before currency came into the picture.
Money came from long distance trade, specifically militaries that needed to eat when traveling long distances. They could not buy food with a ledger, because a ledger requires the other person come back and equal the trade 6 or 12 months later.
The ledger system did not facilitate trust amongst strangers. Until currency appeared, long distance trades were rare, and an offensive military was nearly unheard of.
Oh dear. I was afraid that the barter theory of how trade used to be conducted would come up. Recent research has shown that credit was used rather than barter for early trade ("you give me fish now and I'll give you apples in autumn").
Even worse you tried to define money, which is something on which economists can never agree, and used the definition that money is "a third good that doesn't spoil and that we all agree has value." If people accept that definition, then they'll struggle with understanding today's money. It would be better to say that money is an information system for tradible claims on wealth."
Yap's monetary system is quite remarkable. Thanks for educating us about it!
I think this the seventh time I have rewatched this series
2:11 wait...
Did you just punch me in the face!
Grrr...