But under such circumstances, might Austrian economic thought be tested and compete, legitimately, on equal footing with the perceived legitimacy of 'mainstream' (i.e., Keynesian) economics?*Sigh*. Another large quote from an article - I recommend following the link to the entire article.
Such a situation may currently exist with prisons in testing the validity of fiat currency. Since money is banned in prisons, the historical use of cigarettes by prisoners as money avers that money requires alternative value (i.e., value apart from its use as money) and proves that our present system of fiat currency (and fractional-reserve banking) is eventually doomed.
Prisoners exchange cigarettes for sex, drugs, gambling, and the killing of other inmates (all other recreational activities being provided free of charge by taxpayers). The cigarettes hold alternative value through their direct consumption (smoking).
And what happens to the experiment when cigarettes are banned? Like a free market moving from a gold to a silver standard, prisoners switch to the next best good that possesses the qualities demanded of money: portability, durability, homogeneity, and divisibility.
The article 'Mackerel Economics in Prison Leads to Appreciation for Oily Fillets' published in the October 2, 2008 issue of The Wall Street Journal, revealed the new monetary system in prisons: cans of mackerel, or 'mack' in prison nomenclature. Just as a various goods (e.g., gold, silver, copper, rice, salt, peppercorns, large stones, etc.) have long competed in the marketplace to be the standard of currency, so mack had to fend off books of stamps, PowerBars, and cans of tuna.
Fiat money does not exist in prison. Prisoners do not dye sheets of paper green and attempt to circulate them as money. No inmate would accept this as money, not even if the penal equivalent of a Bretton Woods agreement existed between the toughest gangs.
Money is simple. Banking is obfuscation. Hence some of our national troubles.
______________________________________
Read Nano-Plasm - you know you want to.
© 2005-2009 Stephen Clarke-Willson, Ph.D. - All Rights Reserved.
crediting the commenters GuyZero and xthlc on http://tinyurl.com/llrxe9 , the prisoners don't actually eat the mackerel. It functions like a fiat currency issued by the prison commissary. It is pegged to dollars and its scarcity limited by the fact that prisoners can only obtain it by working at prison wages. - Vincent
ReplyDeleteI have 2nd thoughts about my previous comment. Probably some prisoners do eat the mackerel. The assumption that prisoners don't eat it was based on the article's statement that almost no demand for the product exists outside of prison. But compared to prison food it probably tastes fine and it provides nutrients lacking in the prison diet. The original article did not specify whether any prisoners actually eat the mackerel, and I could not find any further information using google. - Vincent
ReplyDelete