ECON 102 Chapter Notes - Chapter 5: Fiat Money, Commodity Money, Money Supply
Document Summary
Yap island"s money and social customs: the economy of yap, a tiny pacific island, once had a kind of currency that was between commodity and fiat currency. The traditional medium of trade for yap was fei, stone wheels with a diameter of up to 12 feet. These stones had holes in the center that would allow them to be put on poles and used for trade: big stone wheels aren"t a convenient cash source. The stones were heavy, and after completing a trade a new owner made a considerable effort to take home his fei. Although trade was permitted through the monetary system, it did so at great cost: finally it became common practice for the new owner of the fei not to try to take physical possession of the stone. The new owner then accepted a fei assertion without the need to push it. He traded the assertion for goods he was searching for in potential bargains.
