ECON 102 Lecture Notes - Lecture 22: Fiat Money, Commodity Currency, Golf Equipment
Document Summary
Money in a pow camp: an uncommon type of product money developed during world war ii in some. The red cross provided the prisoners with different goods food, clothes, cigarettes, and so on. However, these rations were distributed without particular regard to personal preferences, and the allocations were often inefficient. One prisoner may have wanted cake, while another would have wanted bacon, and a third would want a new shirt. The prisoners "varying preferences and endowments prompted them to trade with each other: nevertheless, barter proved to be an awkward way of allocating such money, because it involved the double correlation of wanting. In other words, a barter system wasn"t the best way to ensure that every inmate got the items he most needed. Even the pow camp"s limited economy required some form of money to facilitate the transactions: eventually cigarettes became the existing "currency" in which prices were quoted and trades were made with.
