And if you take it a step further, you learn that debt and IOU's are at the very heart of human transactions, going back as far as society has existed. The currency needs to reflect the lossy nature of payments that people make between each other.

Yeah. The common myth is that barter preceded currency, like primitive man was going around, trying to swap his carcass for some arrowheads or something. The myth is that the development of currency followed from that, as a way to facilitate barter.

Not so, according to this guy:

https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

Worth a read.

Edit: another good, quick read: https://www.theatlantic.com/business/archive/2016/02/barter-...

Right, debt came first. Then we invented currency as a store of value, so that we could perform even transactions. To avoid creating debt!

> Then we invented currency as a store of value

The book actually says the opposite: Currency is a standardized to-the-bearer IOU, a credit that always has a corresponding debt or obligation somewhere else, usually from the issuer.

The US dollar, for example, has always been a debt instrument, even if that debt was once "IOU some shiny metal" as opposed to "IOU services", or "IOU -1 on your tax bill".

Even with rare-metal coinage, it was important to users that the issuer would honor its stated debt-units, even if its value as a "X grams of metal Y" could go lower.

The easiest way to see that currency is not a store of value is to consider how many old bills get shredded to scrap fibers and replaced with fresh ones, all without triggering a crisis over the "value destruction" going on. It's impossible to imagine the same with, say, burning worn-down diamonds into carbon-dioxide.

I think you're ignoring the larger "currency" and focusing on "fiat currency".

When people traded in gold (or Native Americans traded wampum, etc) it was certainly never destroyed! And there was no one in particular who would necessarily trade it for something specific, so it was not an IOU.

The book sounds great, and I loved his other book The Democracy Project. I will have to check it out.

But just because debt came first, and fiat currencies have always been based on debt, does not mean that all currencies have to be or have been.

Gold chunks (and wampum) aren't currencies though, they're commodities.

So Lloyd Christmas wasn't wrong when he said his IOU's were as good as cash! Take that, Bobby!

I'll see myself out.