Uh, Ricky...

> Money... Paper money IS VERY REAL!
> Before paper money, people used to have to
> carry heavy bags of silver, gold and even
> salt.

> Paper or even plastic money (credit and
> debit cards) is for convienvence. Today we
> are fortunate enough to live in a world
> where you can buy and sell goods and
> services without any physical money changing
> hands. Just debits and credits between our
> bank accounts.

> Money is simply an "I.O.W" we can
> exchange for goods and services... The real
> value is backed by the issueing Government.

You're contradicting yourself. First you said that paper money is real. Then you said that paper and plastic money is for convenience and we all just swap debits and credits between our bank accounts and physical money doesn't have to change hands. Then you said that money is simply an IOU and that the real value is backed by the issuing government.

I've recently been doing a little study on this whole matter so perhaps I can help.

Paper money is based on a concept called "fiat currency." Fiat currency only works when *people*, (that is those that receive the notes of the issuing government), have confidence in the issuing government. It really has nothing to do with being "backed by the issuing government." Since no government in the world, (that I know of), now backs their paper money with a precious metal standard, the only thing the governments have with which to back the fiat currency is the goodwill of the people towards them. So it gets back to the confidence of the people in the government which issued the notes. A good example of this is what happened with Weimar Republic marks in Germany, (I believe it was after WW I). The legend goes that a woman was hauling a wheelbarrow full of money down the street. She stopped somewhere and left the wheelbarrow full of money outside an establishment. Someone came along and stole the wheelbarrow. Now, I don't know if there's any truth to the legend itself but my reading of history tells me the concept is correct.

> I think most people are smart enough to
> realize that $299 is $300 and would not
> round down to $200.

It's not an issue of being smart or not smart. It's an issue of psychology. There have been numerous tests that have proven, in general, people are more inclined to buy a product that ends in 99 than one that is rounded up to the next dollar. Ted Nicholas went even further and proved that, in general, the people that bought from him and his clients were more inclined to buy a product ending in 97 than the same one ending in 99. But like all issues in marketing, your mileage may vary and as always, we have to test for our own situations.

Rick Smith, "The Net Guerrilla"


Where We Discuss REAL Guerrilla Product Development Techniques