Nick Szabo writes in "Shelling Out," an interesting essay on the origins of money:

"The need to remember faces and favors is a major cognitive hurdle, but one that most humans find relatively easy to overcome. Recognizing faces is easy, but remembering that a favor took place when such memory needs to be recalled can be harder. Remembering the specifics about a favor that gave it a certain value to the favored is harder still. Avoiding disputes and misunderstandings can be improbable or prohibitively difficult."

This afternoon I finished reading "Shelling Out" linked above and it has a *lot* to say about this subject. As usual with Nick's stuff it is long, and took 3 or 4 hours to read, but it wasn't so hard for anyone with a monetary background. Definately a critical contribution to understanding where we are going here...

" On a larger scale, the Laffer curve may be the most important economic law of political history." Good to know that all that scholarship on the rise and fall of the Roman Empire was just wasted time. And the implications about the fall of the Soviet system and the importance of IT in Castell's three volume opus can be dismissed in a line about, excuse me, the Laffer curve.

Seriously, no, don't read that post. "The History of Money" by Weatherford is much better, and as a bonus that which he says about the use of tobacco as currency tends to be correct. I kind of liked "Paying with Plastic" by Schmalensee because it encouraged me to appreciate how impossible a construct the credit card industry is by detailing the unlikely moments of its history. Of course, the book ignores any ugliness, like Truth in Lending testimony or Walker Bank & Trust v. Jones.

But really, really, don't read that article. It even misses important elements in the funny stories, like the role of beads and tobacco.

-Jean