ECON 102 Lecture Notes - Lecture 23: Federal Open Market Committee, Yap, Fiat Money
Document Summary
Money and social customs on yap island: yap"s economy, a small pacific island, once had a kind of currency that was between commodity and fiat currency. Yap"s traditional medium of trade was fei, stone wheels up to 12 feet in diameter. These stones had holes in the center so that they could be placed on poles and used for trading: large stone wheels aren"t a handy source of money. The stones were heavy and a new owner took tremendous effort to take home his fei after completing a trade. While the monetary system allowed exchange, it did so at great expense: eventually, not wanting to take physical ownership of the stone was standard practice for the fei"s new owner. The new owner then acknowledged a claim to the fei without having to move it. He exchanged this claim for products which he wanted in future bargains.
