Gold, Fiat and Credit. An Elementary Discussion of Commodity Money, Fiat Money and Credit, Part II

Thomas Quint and Martin Shubik
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Thomas Quint: University of Nevada at Reno

No 1460, Cowles Foundation Discussion Papers from Cowles Foundation, Yale University

Abstract: In this paper we present a series of models, all within the context of a simple two-good economy, which bring out the distinctions between the different types of money and financial institutions. The models emphasize the physical properties of the economic goods, moneys, and trading systems. In Part 1 of the paper, we covered models in which the money is a consumable storable; here in Part 2 we consider economies using durable money, fiat money, or credit. Under this framework we are able to successfully contrast the role of private money lenders, banks, bilateral credit systems, and credit clearinghouses. We are also able to model the importance of the bankruptcy or default penalty in supporting the use of fiat.

Keywords: Barley; gold; fiat and credit; evolution of money (search for similar items in EconPapers)
JEL-codes: C72 C91 D52 D84 E41 E43 E51 E58 G21 K12 L12 N20 P10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his, nep-law, nep-mac and nep-mon
Date: Written
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