Photo from the Wall Street Journal.
Earlier this month, Sam Bankman-Fried was convicted of fraud connected with the collapse of the FTX cryptocurrency exchange he founded. (We discuss aspects of cryptocurrencies in earlier blog posts here and here.) Bankman-Fried had a reputation for dressing casually and for having bushy, unkempt hair. In preparing for his trial, Bankman-Fried paid another inmate at the Metropolitan Detention Center in New York City to cut his hair short. According to an article in the Wall Street Journal, Bankman-Fried paid the other inmate not with currency but with four packets of mackerels—like the ones shown in the photo above—to cut his hair.
Although using packets of mackerels to buy and sell services may seem strange, in fact, packets of mackerel seem to be widely used in place of currency in the U.S. prison system. We explained the situation in an Apply the Concept in an earlier edition of our principles textbook. We reproduce that feature here. Note that the inmate quoted indicates that the price of a haircut at that time was only two mackerel packets rather than the four that Bankman-Fried paid. (Question to consider: Would we expect that prices of services in terms of mackerel packets would be the same across prisons at a given time or in the same prison over time?)
The Mackerel Economy in the Federal Prison System
Inmates of the federal prison system are not allowed to have money. Funds they earn working in the prison or receive from friends and relatives are placed in an account they can draw on to buy snacks and other items from the prison store. Lacking money, prisoners could barter with each other in exchanging goods and services, but we have seen that barter is inefficient. Since about 2004, in many prisons small plastic packets of mackerel fillets costing about $1 each have been used as money. [According to the Wall Street Journal article linked to earlier, the mackerel packets now sell for $1.30.] The packets are known in prison as “macks.”
Some prisoners have set up small businesses using mackerel packets for money. They sell services such as shoe shines, cell cleaning, or haircuts for macks. According to a prisoner in Lompoc prison in California, “A haircut is two macks.” A former prisoner described a fellow prisoner’s food business: “I knew a guy who would buy ingredients and use the microwaves to cook meals. Then people used mack to buy it from him.” In the Pensacola prison in Florida, the prison commissary was open only one day a week. So, several prisoners would run “prison 7-Elevens” by stocking up on goods and reselling them for macks at a profit. Very few prisoners actually eat the mackerel in the packets. In fact, apart from prison commissaries, the demand for mackerel in the United States is very small.
The mackerel economy is under pressure at some prisons, where rules exist against hoarding goods from the commissary. Prisoners caught dealing in macks can risk no longer being allowed to use the commissary or may be moved to a less desirable cell. In these prisons, the mackerel economy has been pushed underground.
The prison mackerel economy illustrates an important fact about money: Anything can be used as money, as long as people are willing to accept it in exchange for goods and services—even pouches of fish that no one wants to eat.
Source: Justin Scheck, “Mackerel Economics in Prison,” Wall Street Journal, October 2, 2008.
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