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The Almighty Buck Science

The Monetary Economics of Thurston Howell III 455

Posted by michael from the she-sells-seashells dept.
DLWormwood writes "In what has to be the Strangest... Essay... Ever... The libertarian Ludwig von Mises Institute website has posted an essay which goes way too in-depth over the topic of why the castaways of Gilligan's Island used Thurston Howell III's 'worthless paper' instead of gold or seashells."
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The Monetary Economics of Thurston Howell III More

The Monetary Economics of Thurston Howell III

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  • That is correct. Never, under any circumstance, should you drink the saltwater!

  • Not bad (Score:5, Insightful)

    by Hanzie ( 16075 ) * on Tuesday August 31, 2004 @06:18PM (#10123221)
    It is actually an essay on economics, and makes some very good points. It uses the Gilligan's Island as an example, because it's very obvious to many, and all the economic factors are known to all the readers.

    The essay then goes on to discuss Swiss Dinara and Saddam Dinars which are both very much real, and quite comparable to money on the TV show.

    I think the headline does a real disservice to the author of the essay.
    • For the person who wrote the headline, and obviously is clueless... What the headline should have been is "Cash is something that can be used to hold value"
      • the person who wrote the headline, and obviously is clueless... What the headline should have been is "Cash is something that can be used to hold value"
        I'd go with:"Cash is something that can be used to hold value, without government backing"
        And I whole heartedly agree about the clueless part
        Actually an awesome read, and either /.'ers hate gilligan or the server is really quite robust.
        -nB
    • After reading that essay, I decided to check out his blog [bkmarcus.com] and I must say, he makes a lot of good points.

      on a side note, why do so many web developers turn writer? my friend pulled that shit. http://www.samhilliard.com/ [samhilliard.com]

  • That's cause (Score:4, Funny)

    by fred911 ( 83970 ) on Tuesday August 31, 2004 @06:18PM (#10123225) Journal
    Everyone knows. Cash is king! (even if you can't do a damn thing with it:-)

  • I smelt a slashdotting coming... (Score:4, Informative)

    by djsmiley ( 752149 ) <djsmiley2k@gmail.com> on Tuesday August 31, 2004 @06:19PM (#10123231) Homepage Journal
    So here is some caches...

    http://216.239.59.104/search?q=cache:f9Bdhed8_h8J: www.mises.org/+&hl=en [216.239.59.104]

    http://216.239.59.104/search?q=cache:8-dfbA5SWVwJ: www.tvtome.com/GilligansIsland/+&hl=en [216.239.59.104]

    Also i have to say this is a rather strange artical. I've taken a quick look at it and if im honest, im totally lost!.

    P.S. Sorry for the untidy formatting, its late at night.

  • But Why... (Score:5, Funny)

    by darth_MALL ( 657218 ) on Tuesday August 31, 2004 @06:22PM (#10123276)
    If they can do this, surely there's someone publishing a paper on "How to make a geiger counter from coconuts". At least I hope they are...

  • I tried to RTFA... (Score:4, Funny)

    by steevo.com ( 312621 ) on Tuesday August 31, 2004 @06:22PM (#10123277)
    ...but after a few paragraphs I couldn't stop thinking about the most important Gilligan's Island question: Ginger or Mary Ann?

    • Mary Ann. (Score:2, Funny)

      by Cowclops ( 630818 )
      Mary Ann. Duh.
    • Both.

    • Re:I tried to RTFA... (Score:5, Funny)

      by Tackhead ( 54550 ) on Tuesday August 31, 2004 @07:04PM (#10123646)
      > ...but after a few paragraphs I couldn't stop thinking about the most important Gilligan's Island question: Ginger or Mary Ann?

      If I had a million coconuts, I'll tell you what I'd do. Ginger and Mary Ann.

    • Re:I tried to RTFA... (Score:5, Funny)

      by LurkerXXX ( 667952 ) on Tuesday August 31, 2004 @07:13PM (#10123732)
      Then there are always a few sickos who'd go for Mrs. Howell.

    • And more important than which one is... (Score:5, Funny)

      by JudgeFurious ( 455868 ) on Wednesday September 01, 2004 @12:12AM (#10125462)
      The fact that (And I know it's rude but it's the truth) both of them are in posession of the only "currency" that would mean anything to the 4 men on the island. It's between their legs.

      Think about it. Gilligan, Mr Howell, the professor and skipper are all going to be interested in one thing before long and honestly, they were probably interested in that prior to ever getting shipwrecked. All four of them hadn't fantasised about banging Ginger or Mary Ann from the moment they stepped onto the boat. Once they get shipwrecked and they've been on the island for a couple weeks it's going to be a question of who's getting laid and not much else is going to matter.

      Now obviously Howell is an old dude and his wife is there so he's going to be on a short leash. He'll keep up appearances but you know he's thinking he could bag one of these chicks if he could get away from the old ball and chain. Then again this was before Viagra so maybe not. If this took place today though Thurston would be knocking the bottom out of Ginger. I'm sure he'd go for Ginger. He's rich, she's famous. That's just the way it works.

      But say Thurston hadn't the benefit of the little blue pill and was out of the mix. Then you've got Gilligan, the professor, and the skipper vying for two women. One of them is going to end up with the professor obviously because he's the only one of the three available guys who's both height-weight proportionate and not a complete idiot. Ginger probably goes for him and has little trouble staking claim to him.

      This leaves Mary Ann to choose between the fat old sailor or the retard. Not a very appealing proposition but she doesn't have to make the choice. Niine weeks and a couple dozen screw ups from Gilligan later he goes looking for coconuts one day and mysteriously doesn't return. The skipper was of course fishing on the other side of the island when it happened and knows nothing about it. In truth though he buried his "little buddy" in a shallow grave so he could claim the sole remaining available piece of tail on the island.

      • Hold on a second. The Professor isn't exactly an intellectual slouch. I doubt he'd have trouble deducing the fate of the skinny screw-up and it wouldn't take him long to realize that he's got something the Skipper quite possibly wants: Ginger. Now what does he do? Since the Skipper represents the closest thing to the authorities the island has, he certainly can't go that route, so he has to take his personal defense into his own hands. He can kill the Skipper outright and then lay claim to both Ginger and M
  • Using Gilligan's Island as an example is a "hook" to draw the reader in, just as the mods conflate opinions into their descriptions of a story. The real story is about how people react to new monies being introduced, especially when one regime is replaced by another. The article cites, for example, the practice of US soldiers distributing $20 bills into Iraq in place of the existing Dinars, but people not only kept using the familiar currency but the Dinar doubled in value as compared to the dollar in spite of it no longer being an official currency. Except in the case of truly "breathrough" innovations, the tried and true usually wins out over the new (and presumably intersting) until there's a critical mass using it. Research shows that the point at which a new innovation takes over is around 25% of the available market (which is why the iPod has begun to pop up so widely; people who aren't early-adopter techie types are seeing enough of their friends using them to get over the inertia of not being the first to use something.) So, this is an article about people using familiar currency over new currency; it juat happens they chose a TV show for their hypothetical example rather than making one up out of whole cloth.
    • "Except in the case of truly "breathrough" innovations, the tried and true usually wins out over the new (and presumably intersting) until there's a critical mass using it."..."So, this is an article about people using familiar currency over new currency"

      i sort of read it as people using a stable currency with no possibility of inflation, over something that could fluctuate wildly. This is why he was talking about a finite amount of money as apposed to the unknown amount of gold in the islands mine.

      also

      • Re:Gilligan's Island is a "hook", not the contents (Score:5, Informative)

        by ahdeoz ( 714773 ) on Tuesday August 31, 2004 @07:07PM (#10123668)
        The whole point of government backed "fiat" money (which was completely missed in the article) is that the supply of money is regulated. Current dollars represent an amount of previous dollars, which represented an amount of gold, which represented an amount of coconuts, which were bartered for fish for cream pies once upon a time. The "fiat" is there to primarily to prevent counterfitting to make sure that the supply remains fairly constant (though gradually increasing over time as more wealth is "created.) The money exchange market (and the market in general, i.e., the price of goods and services, and especially loan interest rates) act as checks that the declared value does not exceed the actual value in previous commodities. Dinars doubled in value because there was a fixed amount (as long as counterfitting did not occur -- which is why it could only continue for a short time) and the quantity of dollars in circulation was rapidly increasing. The "post-fiat" dinars were still directly tied to the dollar (gold) standard but there was a massive influx of gold (greenbacks) at the time, resulting in inflation.
        • The whole point of government-issued fiat money is control over the economy and the ability to extract more value without the citizens noticing or complaing. The money supply doesn't need regulation any more than the soap supply does; if there's not enough, prices will adjust. If there's too much, prices will adjust.

          Real money is simply the most marketable commodity. Fiat money is a tax system.
      • Nearly every nation uses unbacked currency now, so I guess we're all screwed.

    • Re:Gilligan's Island is a "hook", not the contents (Score:5, Insightful)

      by JohnDeHope3 ( 612500 ) on Tuesday August 31, 2004 @06:50PM (#10123539) Homepage
      "The real story is about how people react to new monies..." No. The real story is about how people react to non-inflationary monies. The old Iraqi currency didn't remain popular because it was old, it was popular because it was not being printed in mass quantities. Recall that if the supply of something rises, the price must fall. This is just as true for currency as it is for anything else that has cost associated with it.

  • Thurston Howell (Score:5, Funny)

    by TrentL ( 761772 ) on Tuesday August 31, 2004 @06:23PM (#10123283) Homepage
    I'll bet he could have bought a lot of these. [brandsonsale.com]

    Yeah, it's off topic, but so is the original post. So there.

  • Science? (Score:2, Interesting)

    by Hatta ( 162192 )
    As if economics were science. At least sociologists perform controlled experiments from time to time. Economists use the same sort of observations and reasoning to support their predetermined conclusions that lead people to conclude that the burn mark on that tortilla is an apparition of jesus. In short, economics is a branch of philosophy rather than science. Not that there's anything wrong with that. Philosophy is useful and important, but we have to remember that nothing in economics is as tested and a
    • More like psychology than philosophy. In both the tests required to provide repeatable proof are either impossible or immoral.

      • Re:Science? (Score:3, Interesting)

        by Hatta ( 162192 )
        More like psychology than philosophy. In both the tests required to provide repeatable proof are either impossible or immoral.

        There's a good deal of actual scientific research in psychology. The one that comes to mind is the Milgram experiment. If you don't know about it, you need to. There are also experiments in developmental psychology that tell us when children pick up concepts like the amount of liquid doesn't change when you pour it into a different shaped container.

    • Re:Science? (Score:3, Informative)

      by Nick of NSTime ( 597712 )
      Economics is one of the social sciences. Given the amount of math one has to take to earn a BSc in Economics, it deserves its status as a branch of science!

      • Re:Science? (Score:4, Insightful)

        by Hatta ( 162192 ) on Tuesday August 31, 2004 @06:59PM (#10123609) Journal
        The essence of scientific knowledge is its testability. One could create a complicated system of numerology (fortune telling) that required years of calculus. Wouldn't make it science.

        • Re:Science? (Score:3, Insightful)

          by scruffyMark ( 115082 )
          One could create a complicated system of numerology (fortune telling) that required years of calculus.

          Been done - it's called economics.

      • Re:Science? (Score:4, Insightful)

        by CGP314 ( 672613 ) <CGP@ColinGregor y P a lmer.net> on Tuesday August 31, 2004 @08:07PM (#10124122) Homepage
        I have a BSc in a real science (Physics) and have taken more than my fair share of Economics classes. You could use lots of very complicated math to describe love, but that does not make it any more scientific.

    • Re:Science? (Score:3, Insightful)

      by Coz ( 178857 )
      It's a "social Science" because they follow the scientific method as well as they can, but it's nigh unto impossible to actually perform meaningful experiments in economics above the micro- level (unless you're a world oil power, in which case you can experiment with demand-curves all you want). That's one of the weaknesses of the scientific method when applied to things above the biologcal scale - you can come up with the hypothesis, you can even come up with the experiment - but for it to be meaningful,

    • Re:Science? (Score:3, Insightful)

      by GoofyBoy ( 44399 )
      >Economists use the same sort of observations and reasoning to support their predetermined conclusions

      How do your perform an controlled experiment in astronomy?
      Can you prove anything palentology since there is only one general set of fossils made in one specific set of conditions we can study?

      Or are these all non-science areas?

    • Re:Science? (Score:2, Interesting)

      by Anonymous Coward
      If you spend some time and read the mises.org site (Mises/Rothbard/Hayek) you would realise that they take issue with the Keynesians on this specific issue.

      Keynes was a mathematictian, who tried to put the field of economics under the umbrella of math/physics and thus tried to make it a "hard" science.

      Mises and others, notablely Rothbard, believe that economics belongs not under the science heading (because it is not reproducable, plus other reasons) but should be considered under the area of philisophy.

  • Ob. Gilligan's Island hell metaphor (Score:5, Funny)

    by bobobobo ( 539853 ) on Tuesday August 31, 2004 @06:26PM (#10123322)
    The island is actually a metaphor for hell. With each of the seven deadly sins being represented.

    Greed: Thurston Howell the Third, obviously.

    Sloth: Mrs. Howell, rarely saw her lift a finger.

    Pride: The Professor, had a bit of a superiority complex with his prized intellect.

    Lust: Ginger, duh.

    Envy: Maryanne, secretly covets Ginger's beauty/talent.

    Wrath/Greed: The Skipper, he's both fat and mad all the time so he easily fits into representing both sins.

    Gilligan? He's the Devil who is always wearing red, and always finding someway of foiling their attempts to get off the island virtually every single episode.

  • How much did this guy's education cost? (Score:3, Insightful)

    by Anonymous Coward on Tuesday August 31, 2004 @06:28PM (#10123339)
    Why do any of the other stranded castaways treat the millionaire's government money as valuable while stuck on an island where no such government can enforce its value?

    Obviously, the castaways believe they will one day be rescued. If they can do odd jobs for Mr. Howell in the meantime and he pays them money for doing those jobs they can keep the money and then spend it once they are rescued. In fact, in the end they were rescued and were able to use the cash that Mr. Howell had paid them to bring him coconuts and shit.

    So all this guy's meanderings about governments and the true value of money are just a load of bullshit.

  • Mises Institute rails against fiat abuses (Score:5, Interesting)

    by Ars-Fartsica ( 166957 ) on Tuesday August 31, 2004 @06:32PM (#10123379)
    I am an avid reader of most of what comes out of the Mises institute, which is often listed at SafeHaven.com, a bearish commentary site.

    Their point is that fiat currencies are subject to abuse as they are not secured to a physical entity which limits its growth.

    Note that for for one hundred years prior to the existance of The Fed, the purchasing value of a dollar was virtually unchanged!

    Post Fed, post gold standard, post secured currency, the value of the dollar's purchasing power has dropped 97%. With Greenspan's current uber-loose credit scheme and our fractioanl reserve (aka fractional safety) banking system, this has vastly increased the amount of money circulating even in the last decade, secured now mostly by residential real estate.

    • Note that for for one hundred years prior to the existance of The Fed, the purchasing value of a dollar was virtually unchanged!

      Post Fed, post gold standard, post secured currency, the value of the dollar's purchasing power has dropped 97%. With Greenspan's current uber-loose credit scheme and our fractioanl reserve (aka fractional safety) banking system, this has vastly increased the amount of money circulating even in the last decade, secured now mostly by residential real estate.

      Is that good or bad? W

    • Re:Mises Institute rails against fiat abuses (Score:5, Insightful)

      by Anonymous Coward on Tuesday August 31, 2004 @06:59PM (#10123610)
      Returning to the gold standard is ideologically appealing to a certain type of person, but it's tatlly impractical. There's just not enough gold, and new gold isn't being mined fast enough to keep up with the creation of other types of wealth. There are three possible outcomes I can think of if we tried to put the dollar back on a gold standard

      1: Rapid increase in the price of gold - probably the least harmful possibilite, this would "only" cripple certain industries that need gold for it's chemical or electrical properties. Sure, the price of computers and electronics would quadruple, but hey, it's a small price to pay for a currency that's got real backing.

      2: Using several commodities to back the dollar - the problem is that would put the government in the postion of having to fix a ratio between how many dollars can be backed by an ounce of gold versus how many can be backed by a cow. In effect, that means government is setting the price of cows by fiat. Nobody who distrusts government so much that they want a gold-backed currency would find this acceptable!

      3: Massive deflation - There's not enough gold to back all the dollars, so we take most of the dollars out of circulation. Bad bad bad news. If the value of a dollar suddenly went back up to 30 times it's present value, no borrowers would be able to pay off debts they carry now. Virtually every loan would be defaulted. Sayonara, banking industry.

      Now if you combine any of those with a ban on fractional-reserve banking, you have a recipe for economic depression on a scale that hasn't been seen since the plague wiped out a quarter of europe's population.

      • Re:Mises Institute rails against fiat abuses (Score:5, Insightful)

        by general_re ( 8883 ) on Tuesday August 31, 2004 @08:47PM (#10124368) Homepage
        Well, you're the most insightful AC I've come across in a while, but since I have no mod points, I'll play along with you ;)

        The answer is, IMO, you get both #1 and #3 occurring. There aren't, as you point out, enough ounces of gold in the world to cover the dollars in circulation, nevermind all the other currencies out there. The result is that in order to cover all those dollars, the dollar-denominated price of gold shoots through the roof. All the people who currently own gold suddenly get very, very rich - whoopee for them, but not so good for the rest of us. Of course, you could avoid this by instituting a fractional reserve system, but if you talk to the goldbugs for a very long, you'll soon discover that fractional reserve is a close second on their list of monetary evils, right behind "fiat" paper money, mainly because it doesn't give you that magic immunity from governmental policy that gold is supposed to bring - at the very least, the state can diddle with the reserve requirements and dictate monetary value that way.

        The reason it's bad news for the rest of us is because, contrary to the goldbugs absurd claims that gold is somehow immune to inflationary pressures, gold simply doesn't track consumer prices - i.e., there's no magic inflation-fighting power inherent in a gold currency. You can see this quite easily by comparing consumer prices to the price of gold. Since 1971, when the US finally abandoned the partial gold-standard for good, the dollar-denominated price of an ounce of gold has risen tenfold. The problem is that, if you look at the CPI for the same period, consumer prices have risen only about four-and-a-half-fold since 1971. In other words, the price of gold has far outstripped the price of consumer goods since 1971 - a dollar today will buy you 1/4'th as much "consumer goods" now as it did in 1971, but a dollar today will only buy you one tenth of the gold it bought in 1971.

        What's the result of this failure to track consumer prices, where the value of the currency outstrips the value of the stuff you want to buy with it? Deflation. Massive, sustained deflation, which, for those of you who've forgotten your intro microeconomics, is very very bad. In a hyperinflationary environment, people can't buy stuff because until their wages catch up with prices, they can't afford it. In a sustained deflationary environment, people can't buy stuff because they largely don't have jobs any more - spending gets awfully rare once people realize that, no matter what they want to buy, they're better off not spending it because whatever it is they want to buy, it's going to be cheaper in real terms tomorrow. You're better off just hanging on to your money than you are in trying to use it to, say, build stuff. That's bad, because everyone who has a job here is relying on someone else to part with their money, which gets less and less frequent as deflation mounts. Borrowers, like me with my college loans - heh - are especially screwed, because they borrowed cheap dollars yesterday, but get to pay back their loans with expensive dollars tomorrow. Wheee - sign me up, you betcha. And as a result, anyone with half a brain simply refuses to pay back their loans as deflation gets more and more severe. Fuckem, is the thinking - you're better off in bankruptcy than you are trying to pay off absurdly expensive loans. On the other hand, you might get to see the amusing (!) phenomenon of negative interest rates if deflation becomes bad enough, where your credit card company offers to pay you if you spend money, so as to cut their own losses over time ;)

        No, a gold standard is a recipe for disaster, as you rightly note, and that's just the economics of it - the political end is just as bad. Most of the gold being produced comes from places like Australia and South Africa and Russia. All fince places, full of lovely people, I'm sure, but as an American, I'm not exactly keen on a monetary system that gives the South Africans a say

        • I'm afraid I might be responding to a troll, but I can't help myself. It's my nature, I guess.

          You seriously need to read What Has Government Done To Our Money on the Ludwig von Mises institute web site. That post was so completely mixed up, I don't know where to begin to refute it.

          If we go back to a classical gold standard, the price of gold in dollars will go sky-high. That doesn't matter unless you use gold for something. Yeah, jewelry will become expensive, but so what? It already is. The idea

          • You seriously need to read What Has Government Done To Our Money on the Ludwig von Mises institute web site.

            Been there, done that, bought the t-shirt. If you want to refute me, refute me - don't send me to the library to read something I already read fifteen years ago.

            If we go back to a classical gold standard, the price of gold in dollars will go sky-high. That doesn't matter unless you use gold for something.

            Errr, but we would be using gold for something - a currency, remember? You may not think t

          • That doesn't matter unless you use gold for something.

            Check. [pamp.com]

            Any money standard backed by a physical commodity will have a detrimental effect on some industry, unless that physical substance had truely no useful qualities beyond scarcity (and durability). More than 100 or so years ago, gold was like that, in that there was nothing practical you could do with it. But with today's modern technology, we've found a way to make productive use of almost everything.

      • wrong... (Score:3, Insightful)

        by dh003i ( 203189 )
        Read The Case for a Genuine Gold Dollar. Rothbard, Murray. [mises.org] and What Has Government Done to Our Money? Rothbard, Murray. [mises.org] Alternatiely, perhaps the best way is to allow the free market to choose it's money. See The Determination of the Purchasing Power of Money. Mises, Ludwig von. [mises.org]

        1. There are substitutes for gold. Obviously, if gold were used as money, it would be uneconomical to use it as computer parts.

        2. As Rothbard explains, a "commodity basket" is extremely flawed and utopian in the worst sense

    • I'm in agreement with you. After all, the 1913 Webster's dictionary defined a dollar thusly (a definition created in 1792 with the creation of the US Coinage Act, I believe): 1. (a) A silver coin of the United States containing 371.25 grains of silver and 41.25 grains of alloy, that is, having a total weight of 412.5 grains. Previous to 1837 the silver dollar had a larger amount of alloy, but only the same amount of silver as now, the total weight being 416 grains.
    • What is interesting is that younger Greenspan was quite a passionate advocate of the gold standard, see, e.g., his essay in this book [amazon.com] (scroll down couple pages to the TOC).

      I was always wondering how could he take his current job... ;-)

      Paul B.
  • "Republic credits will do"
    "No, they wont!"
    • > "Republic credits will do"
      >
      >"No, they wont!"

      Keep the duped credits [yale.edu] from Star Wars Galaxies out of it.

      MMORPGs are great economic simulators. You can tell when a credit dupe appears because overnight, prices on items/resources whose quantities are fixed will skyrocket. The best defense against credit dupes is to accumulate loot whose value is unlikely to diminish.

  • Wow. (Score:3, Funny)

    by BandwidthHog ( 257320 ) <inactive.slashdo ... icallyenough.com> on Tuesday August 31, 2004 @06:38PM (#10123431) Homepage Journal
    The next time I use the vending machine downstairs, my mind may well snap.

  • I suspect (Score:4, Insightful)

    by Anonymous Coward on Tuesday August 31, 2004 @06:38PM (#10123432)
    that if Gilligan's Isle was real that money really wouldn't be that wortwhile and the group would very quickly revert to a barter system. And I think we all know what services Ginger and Mary Ann would provide in return for a coconut radio or firewood...

  • Money in MMORPGs (Score:5, Insightful)

    by Colazar ( 707548 ) on Tuesday August 31, 2004 @06:48PM (#10123516)
    Oddly enough, that made me think of MMORPG economies. The fiat currency of the MMORPG company (gold pieces) is usually horribly inflationary, since more is constantly being added. (Even ignoring duping.) Stable values are invariably found in worthless items that are no longer being created.

    Or maybe it's not so odd...MMORPGs are the most likely exposure /.ers have to widespread currency exchange, I guess.

  • Mystery solved (Score:4, Funny)

    by nizo ( 81281 ) on Tuesday August 31, 2004 @06:49PM (#10123532) Homepage Journal
    So this is what people with advanced degrees in economics do with their time! I could have been writing papers about Gilligan's Island instead of coding until 3am. Boy did I pick the wrong degree or what????
  • ...the Skipper trades his fish for Ginger's decorative shells, not because he wants shells, but because he knows he can trade them for Gilligan's coconuts.

    And later we see:

    Right now, the Skipper is willing to trade one of his fish for two coconuts...

    What is wrong with the Skipper, why didn't he ignore Gilligan and go straight to Ginger, the source of the premium coconuts?

  • Paper Money Is Accepted Because... (Score:3, Interesting)

    by Bravo_Two_Zero ( 516479 ) on Tuesday August 31, 2004 @06:59PM (#10123614)
    Paper Money Is Accepted Because... ...there is the expectation that it can be more easily exchanged for goods in comparison to a barter system.

    As long as all merchants on the island accept paper currency, it is money. Barter is a hassle, since the medium of exchange is determined in, say 5 pies for 1 shirt. You may have pies and need a shirt, but no one has a shirt to trade. You may have a shirt to trade, but Maryanne ain't bakin' pies today. Money, however, can be used more flexibly.

    Had one island merchant refused to accept paper money, the currency system might have crumbled. Imagine if you went to buy beer, and the merchant said "sorry. we only accept shells." How will the merchant employ shells as currency without a dollar-to-shell exhcnage around the corner?

    Also, a key premise to the show was that they would be rescued. The acceptance of paper currency showed optimism as much as anything. They obviously did not expect to be unable to use the paper currency ouside of the island.

  • Inflation and Gold (Score:4, Interesting)

    by Detritus ( 11846 ) on Tuesday August 31, 2004 @07:11PM (#10123699) Homepage
    The discovery of the New World by the Europeans created a monetary mess when they brought back large quantities of gold and silver to Europe.

    I always chuckle when I read a story about the riches that could be generated from asteroid mining. Let's assume that I snag an asteroid and recover several thousand tons of gold and platinum. What is that going to do to the market price of gold and platinum?

  • For the realists...

    No, they wouldn't have used his money. They would have gone into survival mode and just helped each other regardless of getting anything in return.

    For the suspenders of disbelief...

    When they get rescued, his money will still be worth something back home.

    For everyone else...

    There's an essay to read...it's not about Gilligan's Island.

  • Barring reality. (Score:4, Funny)

    by eadint ( 156250 ) on Tuesday August 31, 2004 @07:15PM (#10123746) Homepage Journal
    if this had really happend.
    any decent thinking man would have, forced thurston howell to sign over his money to them, and then berried the asshole. clubbed of killed all of the other men and tied up ginger and marianne for use as alternate sex slaves.
  • Now this I don't believe is true anymore, but the U.S. Dollar use to be the value of gold that the government owed you. Legal tender, a promissory note that said you had so much gold or what not. Hence the need for Fort Knox.

    The idea that the Professor could print money and say will use this to trade commodities is stupid, and he would be voted off the Island real quick. However if he some how said that I will hold something for you and I will give you this dollar which you can trade back for this item.

  • what about soldiers buying old dinars? (Score:4, Informative)

    by spook brat ( 300775 ) on Tuesday August 31, 2004 @07:19PM (#10123780)
    When I was there the main use I saw for the dinar was selling them to GIs who wanted souvenirs. I figured the rise in price was due to the Iraqis learning what passed as an acceptable price, as well as the Gis realizing that the supply of good-quality bills was diminishing (ie. fixed demand but dwindling supply).

    When I left people in the shops were still selling large quantites of former regime currency for prices ranging from $1 per bill to $20 for a bundle of identical bills. There's a good chance I just wasn't in touch with the local economy, but when the locals are consistently selling their old bills for loose change over the course of a year I have trouble seeing their dead currency as picking up value.

  • Gilligan's Island: A Communist Model (Score:4, Funny)

    by Quash ( 793610 ) on Tuesday August 31, 2004 @07:19PM (#10123783)
    Only a libertarian would overlook that Gilligan's Island is actually an allegory for a communist society. Odd, you say? Let's discuss: On Gilligan's Island, the Howell's, in all their pomp, bring all their money on a three hour tour. It's value on the island: worthless. But, they drape themselves in their mainland social positions and, as a result, become the buffoons of the show. The Professor controls knowledge on the island. There is no place for religion. Only fact, logic, and above all else, science. The skipper drives the capitalist machine on to the rocks, destroying it and becoming the *real* side-kick of the *supposed* side-kick: Gilligan. Look closely at their relationship. And whose island is it? That's right, it's Gilligan's Island. The everyman. The lowest person in the social order on the boat, that day. Yet, the centre of the island, clad in communist red, once they shipwreck. The commonman now reigns. And Ginger and Mary Anne? Well, even communists like chicks. /. that!

  • Good timing (Score:5, Interesting)

    by Malor ( 3658 ) * on Tuesday August 31, 2004 @07:21PM (#10123796) Journal
    Heh, it's interesting that this was posted now. I just changed my .sig a few days ago to touch on this topic. I'll repeat it here in case I someday change it:

    "US Dollar, n: A politician's promise to pay nothing on demand."

    This is one of the few government promises you can be ABSOLUTELY CERTAIN will be kept.

    What the article is talking about is, indirectly, that the paper money you use every day has no inherent value, so why on earth would anyone accept it as money? A currency that is unbacked by anything, but is decreed by law to be a medium of exchange, is called a 'fiat currency', because it obtains its value from executive fiat (decree). Basically, the government is forcing you to accept the US Dollar at gunpoint. If you do not, they can arrest you. (seriously, they can!)

    At one time, money was mostly gold, and to a lesser degree, silver. The way it basically worked was this: you, the gold miner (or perhaps, trader with foreign gold currencies), brought your gold to the government mint. In exchange, they gave you a certain number of gold coins, less some percentage to cover the costs of coinage. Gold must be alloyed with other metals, generally copper, to have enough hardness to last through day-to-day wear, and coins were rated based on their 'fineness', or how much actual gold they had in them. Offhand, I think an 8% copper mix was fairly common, and I believe it was often the case that a 1:1 trade was executed; for every ounce of gold you brought in, you received .92 of an ounce, plus .08 ounce of copper, in the form of a coin. The .08 was, in essence, the coinage fee.

    Well, over time, monarchs and governments figured out that they could increase that percentage a very great deal; for every one ounce of gold they took in, they only had to give out, say, half that much gold, if they mixed in enough copper. Historically, this has been a major sign of economic distress, sometimes presaging the complete failure of the government. Henry VIII is often cited as an egregious example; his 'silver' coins were actually copper with a very thin coat of silver. The high points would often wear off, leading to his nickname of 'Old Copper-Nose'. He did terrible damage to England's economy through this practice. There is a specific word for this form of taxation, but I cannot remember it or find it with Google right now. But it is very, very lucrative; the more you debase your currency, the more of the real value in the economy you can extract through deceit. Over the long haul, the strongest economies were always the ones with the strongest currencies, likely due to the fact that more of the money stayed in the hands of the population. A hidden tax is still tax, and taxes are bad, on the whole, for an economy.

    Now, consider what we have now. Instead of anyone doing (a great deal of!) work to mine gold or some other metal out of the ground, instead, the governments of the world can simply wave their hands and create new currency at will. This is absolutely wonderful for the governments in question, because it allows them to extract, at zero cost, value from their own, and other economies. By printing up bills marked '100', they can extract 10 times as much value as from bills marked '10', at zero extra cost. The US is taking huge advantage of this; we are importing vast quantities of goods from all over the globe, and in exchange we're shipping back worthless green paper, to the tune of over a billion dollars a day. This is great for us, but foreign readers... you and your countries are being RAPED. If you think the US is hated now, wait until the world figures out out just how bad it's been rooked.

    As a quick aside, I got my very first 'flamebait' mod awhile back for observing, in a discussion about using ink-jet printers to print money, that of COURSE the government hates that! They don't want anyone muscling in on their turf. Printing fifties on your inkjet and spending them

    • Re:Good timing (Score:3, Informative)

      by Malor ( 3658 ) *
      I just remembered the name for taxation through debasement: segniorage. No wonder I couldn't think of it. Not a common word anymore.

    • Re:Good timing (Score:5, Informative)

      by jdavidb ( 449077 ) on Tuesday August 31, 2004 @08:44PM (#10124343) Homepage Journal

      Basically, the government is forcing you to accept the US Dollar at gunpoint. If you do not, they can arrest you. (seriously, they can!)

      I'm at least as anti-fiat money as yourself (being an anarcho-capitalist, I do not believe the government should engage in any decrees of value for any item; means of exchange can be developed by the free market), but you are actually wrong on this point. Nobody is required to accept the US Dollar. Unlike taxes, you will not be shot for refusing to particpate. :)

      This is actually a common misunderstanding arising from the phrase legal tender [ustreas.gov]. Check out that link and you'll find the following:

      There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise.
      • Ron White from the Blue Collar Comedy Tour did a bit on this, talking about coupons at a fair to buy beer. There are places like that which will not take you cash, you have to go buy their little fake currency and use it, the vendors won't take dollars directly.

        I've been in situations where I won't take money either. I've done service for service trades, my computer skills for some skill they have. I'm not interested in cash, I want them to do something for me. I mean I suppose realisticly I'd do it for en

  • My wealth is in bits... (Score:3, Interesting)

    by NotQuiteReal ( 608241 ) on Tuesday August 31, 2004 @08:00PM (#10124067) Journal
    ... in some computers at Fidelity. Most of it anyhow. I assume they do backups. I don't care what OS they use.

    For some reason, Money reminds me of the observation about calculators that my High School kid just passed on to me "they get to use all the time. Just like in the real world." I've always told my kids, if you face a world without calculators, you've probably been studying the wrong thing anyhow [e.g. you would be better off knowing how to kill things with pointy sticks.]

    Money is like that too; If my bits become worthless, the bullets in my closet will be all of a sudden be worth a lot!

  • Rescue? (Score:3, Interesting)

    by giminy ( 94188 ) on Tuesday August 31, 2004 @08:04PM (#10124098) Homepage Journal
    Aren't we ignoring a big point? The folks on Gilligan's Island kept hope that they would eventually be rescued or find a way off the island. Whoever treated the Howells nicely or got a lot of cash would certainly be rich once they set foot back in the United States.

    It's a promisory note, and for all the castaways knew, the US government would still back up their dollars when they returned. In fact, thanks to the Professor's radio and the occassional island visitor, they *knew* the US was still A-OK.

    That's reason enough to horde cash and gold to me...

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