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And finance Allah shmoop what is legal tender and no

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it's not an official great of meat like this Filet

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is legally tender but I still can't cut it And

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it's not the name of a magazine that will get

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you on an FBI watch list if you subscribe to

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it either Legal tender refers to money like the dollars

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and cents you have in your pocket that's legal tender

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the actual bills and coins that allow you to buy

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stuff Yeah that's legal Tender legal tender is a medium

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of exchange that's been recognized by the government as thie

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acceptable form of payment in that jurisdiction and old by

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the way it's recognized by the people who accept it

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as payment as well First medium of exchange While this

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term refers to something that everyone accept is a form

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of payment it's medium right It's shared by everybody kind

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of in the middle It allows an economy to move

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past the bartering stage of just trading beaver pelts for

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bottles of Coke Think money of course but also think

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gold or wampum or cigarettes in an old prison movie

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Everyone recognizes value and so will trade goods and services

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For the item It's a way to transfer in store

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value so legal tender is a kind of medium of

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exchange The legally accepted form of exchange right Those dollar

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bills are the legally accepted form Well the government has

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said In our country this will be the medium of

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exchange So in the US it's dollars in the you

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It's the euro In the UK it's the pound in

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South Africa it's the rand and so on So you're

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on a cruise ship that sinks way out in the

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ocean You and some of the other vacationers wash up

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on a desert island Everyone starts doing different jobs One

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guy build shelters out of palm leaves and you know

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some sticky stuff He scrapes off of rocks Other people

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fish or catch crabs You know the crabs you could

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eat You make a delicious drink out of coconut milk

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honey and the fermented juice from a weird orange berry

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you found growing in a cave At first people trade

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things by barter This works but well only up to

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a point To trade your coconut drink for food you

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need to find a fisherman who wants some of what

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you've got to offer If no one with fish wants

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cocoa drink today Well no fish for you Well eventually

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people start stringing seashells together to make special necklaces These

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necklaces get traded for anything you want Now every time

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you give someone your drink well you get a string

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of shells You can then use the shelves to buy

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fish It's no longer necessary to find someone with fish

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who wants some cocoa Drink you Khun Sell the drink

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to the shelter builder for a set of shells and

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then use those shells to buy fish Right So what's

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happened here The shells have become the medium of exchange

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there The currency of the island Well after a while

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you give up hope of rescue You decided to form

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your own country You elect leaders Build yourself a palm

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tree and rock blue Ah Parliament house First act turned

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the strings of sea shells into official currency You make

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them legal tender Well the island government now Khun regulate

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the number of shell strings that get made the same

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way The Federal Reserve in the Treasury Department print currency

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and regulate the dollars that circulate through the economy You've

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been selling out of coconut and you've built up quite

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a pile of shells there You're getting rich Now if

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you get rescued first step after a shower Of course

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Check the foreign currency exchange market for the shell string

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two dollar exchange rate and hope it's a good one

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Yeah Don't do it right at the airport Wait till

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you get into town You get a way Better deal

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