My code is trying to kill me

Project Economix 7 - money

19.01.2015In Projects

To implement money in the simulator, first I need to know what money is. Last time I wrote why it was invented and why it is necessery. But how does it work and how it did emerged?

You can google it yourself and find many plausible theories, I'll just sumarize the parts I think are important.

First, imagine the world without money where you trade by bartering; it's possible but problematic. A farmer can trade some apples with a toolmaker for a new tool. But he can't trade apples for strawberies because when strawberries are ripe, apples are not yet fully grown. What he can do is to promise he'll give some apples in a few month for strawberies he will get now. So, the root of money is a promise, you can call it debt. If two farmers trust eachother, they can make such trade.

In a small community, it is quite possible to trade without money, only on promises. But how many promises can I give to someone? Can a farmer promise he'll give tons of apples? He can, but only if he has a large apple orchard. He actually have a credit rating to his promises. The more productive he is now, the more promises he can make. So you don't need money to have debt, credit and credit rating. That seems to be inherent to the trade system.