At bottom money is, then, a social [[convention]], but a convention of uncommon strength that people will abide by even under extreme provocation. The strength of the convention is, of course, what enables governments to [[profit]] by inflating (increasing the [[quantity]] of) the currency. But it is not indestructible. When great increases occur in the quantity of these pieces of paper—as they have during and after [[war]]s—money may be seen to be, after all, no more than pieces of paper. If the social arrangement that sustains money as a medium of exchange breaks down, people will then seek substitutes—like the cigarettes and cognac that for a time served as the medium of exchange in Germany after [[World War II]]. New money may substitute for old under less extreme conditions. | At bottom money is, then, a social [[convention]], but a convention of uncommon strength that people will abide by even under extreme provocation. The strength of the convention is, of course, what enables governments to [[profit]] by inflating (increasing the [[quantity]] of) the currency. But it is not indestructible. When great increases occur in the quantity of these pieces of paper—as they have during and after [[war]]s—money may be seen to be, after all, no more than pieces of paper. If the social arrangement that sustains money as a medium of exchange breaks down, people will then seek substitutes—like the cigarettes and cognac that for a time served as the medium of exchange in Germany after [[World War II]]. New money may substitute for old under less extreme conditions. |