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Wednesday, 20 March, 2013 22:09

The Tinkerbell Effect

The Tinkerbell Effect

What is The Tinkerbell Effect?

The Tinkerbell Effect

The Tinkerbell Effect

The Tinkerbell effect is a term describing things that are thought to exist only because people believe in them. This effect is named after the fairy from Peter Pan play.

The Tinkerbell effect describes very well the fiat money system. The fiat money system exists only because people trust it.

But it’s not only the fiat money system that fits into the Tinkerbell effect. Other types of money also do it well, for instance gold and silver. Inca people had plenty of gold and silver and they were using them to make jewels. Because it was so abundant, gold and silver were not use for trade, as for them it didn’t had any value. When conquistadors arrived and conquered Americas, they took home a lot of gold and silver. Eventually this impressive amount of gold and silver that reached Europe, started the Price Revolution, a period of inflation caused by too much money chasing the same amount of goods and services. So the value of gold and silver decreased as everyone had it and there were very little things you could buy with it.

In Micronesia, Rai stones were used as a currency. Rai stones are large circular pieces of stone that were used as gifts or exchange medium for goods and services. This was possible only because people believed in their value. This is how The Tinkerbell Effect applies.

In Africa, shells of sea snails were used as currency. Because it was an exchange medium recognized by the people, shells were used for centuries as a currency in Africa. This is another example of the Tinkerbell effect.

So the Tinkerbell effect goes very well in almost all the money systems. It’s all a matter of trust!

 

Vivian Vanatu

Vivian has been working in internet marketing for over 3 years. He has developed several websites and online businesses and seeks to educate people about how to use internet to grow their business. My G+ profile

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