ShmoopTube

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And finance Allah Shmoop what is the double coincidence of

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wants All right well it sounds like a new R

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movie from the nineteen forties Black and white evil shadowy

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figures Guys who talk with marbles in their mouth You

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know like that Well or maybe the manner in which

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an economist would describe flirting you know right before she

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grabs a supply curve of swipe right were the dates

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on tinder But the term has a totally different non

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romance related meaning for economists It refers to the very

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limited conditions that have to exist in order for bartering

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to work well in most basic terms the double coincidence

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of wants describes the rare situation where two parties each

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have something the other wants And both are willing to

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make the exchange the perfect barter situation right Okay so

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flee Bartering like this guy Different parts Bartering is when

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you trade a good or a service directly for another

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good or service You agreed to mow your neighbor's lawn

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if well she'll bake you some of her special oatmeal

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chocolate chip cookies That's barter It doesn't happen very much

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in modern economies mostly because well we skip the bother

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and just use money well Nowadays when you want to

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buy something you typically use what's called a medium of

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exchange and specifically well you use money At least in

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America you do currency representing a value the worth of

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which everyone generally agrees upon You go to the store

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pick up a pint of double chunky Chako marshmallow fudge

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ice cream You hand over the cash and the treat

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is yours if you don't have cash on you or

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if you're buying your double chunky Chako marshmallow fudge online

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while delivered next day via drone inconvenient dry ice Amazon

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packaging Well you can use some kind of cash equivalent

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like a credit card or a PayPal account thing You're

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venmo or apple pay or something like that The point

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is you can use some sort of currency The currency

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represents a medium of exchange right It is a medium

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itself and you agree on the number of units of

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that currents to make the exchange affair on both sides

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released Acceptable It can be used in any commercial venture

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because well everyone will take it instead of directly trading

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goods and services that goods and services can be traded

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for the medium of exchange which can then be used

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to get other goods and services right It's called liquidity

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Essentially its financial liquidity and dollars are trusted as a

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medium of exchange so they're the most liquid currency in

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the country Well that's how things work in the modern

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economy Anyway You trade some medium of exchange that is

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you use money to buy what you need Okay so

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a bunch of aliens appear out of nowhere They blast

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the earth with nuclear destruct O raise jazz for target

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practice Thanks guys Then they fly off to blow up

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some stuff nearer Alfa Centauri Yeah Most of the world's

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destroyed civilization has fallen apart People wander the destruct O

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scarred wasteland in small warring bands There are no more

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Treasury Department's No more central banks no more paper towels

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no more credit cards or Apple pays no more money

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at all No medium of exchange whatsoever If the roving

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post apocalyptic tribes wanna trade for something well they need

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barter Here's where that double coincidence of wants then comes

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into play right It's a coincidental that both sides double

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of them want the same thing If you want a

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pint of double chunky chocolate marshmallow fudge Well you can't

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just stroll down to the store and pick it up

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Instead you first have to find someone who will dwell

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among the starving remnants of humankind Still makes premium specialty

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ice cream That search represents the first want in the

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double coincidence of wants You want the double chunky chako

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marshmallow fudge You find someone who keeps alive the nearly

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forgotten art of double chunky production But to get it

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from them you have to have something they want That's

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the second one In the double coincidence of once you

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need to have something that they want at the same

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time that they have something that you want You getting

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all this Well all you have are a couple of

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knives Cem tattered rags and a few pieces of dried

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rat Well to get the ice cream the other guy

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had better want a knife set Born up close aren't

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nearly inedible chunks of salted vermin Otherwise no deal no

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barter Nothing happens well to barter than each party has

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to have something the everyone wants That's a double coincidence

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of wants There has to be a coincidence of both

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people wanting something that the other person has at that

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time But it makes bartering inefficient That hold double coincidence

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thing is rare a lot rarer than when people have

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the amount of dollar bills in their pockets to just

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go buy stuff Using a medium of exchange works much

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better because you don't need to actually find someone who

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wants what you have to offer like that physical good

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You just trade what you have for money and then

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they use that money to get what they want So

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you teach people to speak Albanian You want some Chinese

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food for dinner In the barter system you have to

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find someone who makes Chinese food and who also would

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like to learn Albanian Yeah double coincidence of wants or

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you have to go through a complicated series of transactions

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to get what you want You teach Albanian to a

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person who makes key chains They give you some key

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chains for your trouble You trade a few key chains

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to someone who owns an orchard for a few bags

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of apples You then take those apples to the Chinese

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restaurant for a plate of chow mein You have to

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spend all day figuring out a series of transactions that

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gets you from Albanian lessons to Chinese dinner Money cuts

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through this process you don't need the double coincidence of

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wants for transactions that happened Just one want at a

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time plus some cash at least until the trigger Happy 00:05:21.713 --> [endTime] space travelers show up Roman Everything's over Yeah

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