Chapter 10: The Federal Reserve

The Gold standard, I've heard a lot about it but I've never understood what it implied. Our modern currency doesn't have any value because we don't use the gold standard. That means with the dollar, "you can't take them to the government and demand anything in return"(Wheelan 229). This brings me to the functions of currency. "Firstly it serves as a means of exchange"(229) This is great for me because that means I don't have to accept Hostess cupcakes as a means of currency when I work at the local Hostess cupcake factory. "Second, it serves as a unit of account"(229) This means we can clearly see how each item we want to buy or sell can be measured against another product, because their worth is measured on the same scale. "Third, money must be portable and durable"(229) If money wasn't durable the government would have to produce more and more which is expensive. Also, It has to be portable for the ease of purchase. "Last, money must be relatively scarce so that it can serve as store value."(229) These concept could also be seen in U.S. prisons. Inmates used some quantity of mackerel as a currency. Mackeral doesn't spoil and has worth because it can be eaten.