GUNDERSEN · 20 SEP 2026a story, turning into explainers

The Hierarchy of Money, mapped

Gregory Gundersen's village parable is the best plain-language account of how money actually works: stones become notes, notes become reserves, a village's money becomes the world's. This map starts with the illustrated story — his wording, our animals — and turns that story into various explainers, one idea at a time.

The post

Gundersen ↗

The story

5 chapters, drawn

The cast

11 animals

Walk it

problem → layer

Tick a page when you have worked through it; this browser remembers.

The spine

Five layers. Each exists because the one below went rigid. If you read nothing else, read this list — every explainer on this map unpacks one of these.

1 · CommodityA villager could not settle a debt by making more promises. Stones are money because they are hard to collect. Credit and interest are stacked on top the first time someone needs boots today and stones next year. Intermediation
2 · Bank moneyA bank could not settle a debt by creating more of its own deposits. The raccoon writes a line and the bull has a note. Notes are money between villagers. They are not money between banks. Creation
3 · ReservesThe tortoise issues money that banks will accept from each other. Harvest drains stones, overnight loans fail, the system gridlocks, and debt moves up. Elasticity and a single blunt rate. Centralization
4 · Reserve currencyOne village could not settle a debt by creating more of its own currency. The fox defaults. The crow's money becomes the habit, then the peg. Exchange
5 · FiatAnd yet nothing happened. Convertibility ends. Taxes, wages and contracts stay in black money. The floor was a promise, and the building was never resting on it. Fiat

01 · THE STORY

The illustrated parable

What we have today. Gundersen's chapters, nearly verbatim, with the raccoon, the bull, the tortoise, the fox, the heron and the crow in the roles. Pictures sit on the matching sections. This is the source the explainers will grow from.

Intermediation

Money · Supply · Debt · Interest · Bank · Balance · Illiquidity · Speculation

Stones, then a promise, then a bank. Why a pile in the vault is not the same as a balance sheet, and what a rumour does to a solvent bank.

Creation

Payment · Settlement · Residual · Deferral · Acceptance · Creation

Banknotes, stone runners, netting, the overnight rate, and the stroke of the pen that writes a deposit into existence.

Centralization

Squeeze · Gridlock · Backstop · Central bank · Reserves · Inflation · Policy

Harvest drains the stones. Two banks cannot pay each other. The tortoise becomes the bank-of-banks, then the rate.

Exchange

Currency · Trade · Exchange · Correspondence · Exposure · Default · Reserve

The fox's village, the heron's, the crow's. Why black money becomes the thing you don't bother to exchange.

Fiat

Devaluation · Conference · Privilege · Dilemma · Float · Fiat

The peg, the privilege, the dilemma, and the day convertibility ends and the market does not notice.

Hierarchy

the closing argument, one page

The pattern in three sentences, and the line the whole thing rests on: for now, black money is the best money in the world.

The cast

11 original animals

Raccoon banker, bull rancher, beaver shoemaker, owl widow, badger rival bank, goat teacher, field mouse harvest, tortoise central bank, fox / heron / crow for the three villages.

02 · EXPLAINERS

Turning the story into pages

Same shape as AI Orchestrators: each block exists because the one below broke. Walk the whole stack, or walk one chapter at a time — the stack sits at the top of each story page. The rest of these will be one-idea pages grown from the story.

Walk the hierarchy

problem → solution · the whole stack · Back / Next / Play

Ten breaks from barter to fiat. Each chapter also has this stack, one section at a time: Intermediation · Creation · Centralization · Exchange · Fiat · Hierarchy.

Why a stone is money

from Money · Supply

Scarcity, labour, and the flood that is monetary policy without a committee.

Credit is just a promise with a price on time

from Debt · Interest

The bull needs boots today. The extra five stones are not a trick.

A bank writes money into existence

from Bank · Balance · Creation

Two lists that must match, and a line in the ledger that is not a stone.

Solvent is not the same as liquid

from Illiquidity · Speculation

The vault can be empty while the books balance. That is the run.

Your own promises are never payment

from Settlement · Gridlock · Hierarchy

The sentence the whole structure is. Why each layer exists.

A reserve currency is a habit, then a privilege

from Reserve · Conference · Privilege · Dilemma · Fiat

Nobody voted for black money. Then they wrote the habit down. Then the promise outgrew the pile.

Sources

The Hierarchy of MoneyGregory Gundersen, 20 September 2026 — the parable this map is built from Money and BankingPerry Mehrling — the lecture series Gundersen credits for the hierarchy Money Creation in the Modern EconomyBank of England, 2014 — what a stroke of the pen actually is All mapsthe rest of the explainer shelf