Fiat Money

Fiat Money

Setting: Acient Egypt

Pharaoh: Asker, you are my most loyal cheif accountant, please tell me, how do we get out of our terrible national defecit?

Asker: May you live for ever my lord, our stores of gold and silver are empty, but still we must pay the soldiers and the managers. Not even mentioning our debts to the four united kings to the south for assisting us in our latest battles.

Pharaoh: Aw, yes, but you haven't even mentioned aquiring new slaves to continue working on my wonderful sphinx. Do you know how the other kings will laugh at me if I don't finish it before I die???

Asker: May you live for ever my lord, we need many more slaves but slave catchers are demanding more and more money! Its very difficult to keep up.

Pharaoh: this is disturbing my sleep and I am troubled in my dreams.
Asker: May you live for ever my lord, what type of dreams are you having?
Pharaoh: there is a large golden cafe and I am feeding it gold and it keeps asking for more and stamping it's feet when I run out. Then I started feeding it papyrus, and then it was happy.
Asker: May you live for ever my lord, this is a sign.
Pharaoh: what?
Asker: May you live for ever my lord, it means we need use papyrus IOU's instead of gold and promise to hand over the gold on request.
Pharaoh: but, we both know there is no more gold.
Asker: May you live for ever my lord, Only you and I know there's no more gold! people trust us.
Pharaoh: it could never work
Asker: May you live for ever my lord, your dream was from the gods, it must work!
Pharaoh: fine, we shall issue papyrus in place of gold and silver. Make it so.
Asker: May you live for ever my lord, Then we can spend as much as we want. This is brilliant.
Pharaoh: This means that I can build a bigger sphinx!
Asker: May you live for ever my lord, We can hire a new set of government servants to help me run things.
Pharaoh: we can have a huge ball in honor of my birthday.
Asker: May you live for ever my lord, we could start a system that will care for our citizens from cradle to grave.
Pharaoh: excellent. Please draw up the prototype for this, shall we call it fiat money.
Asker: May you live for ever my lord, I will do as you say.