In 2004, the U.S. banned cigarettes in all federal prisons and it was pretty much the best thing that could have happened to the packaged mackerel industry (yes, you read that correctly...the packaged fish).
So how did a smelly package of fish become the gold standard of America's federal prisons? Well, for a variety of reasons (we'll let your imagination run wild) prisoners are not allowed to possess actual currency. Up until 2004, they used cigarettes as their currency of choice to purchase anything from illicit goods such as stolen food and home-brewed "prison hooch," as well as services, such as shoeshines and cell cleanings. But once cigarettes were banned, prisoners needed a replacement currency and the 'mack' was deemed to be the best choice because it was worth roughly $1 at the commissary and pretty much no one wanted to eat it.
As one prisoner notes in the Wall & Broadcast video below, the 'mack' was also "inherently inflationary" because its supply was limited to 14 macks per week per inmate....
"Mackerel had utility because it was inherently inflationary. A certain amount of macks came into circulation every day. Every inmate can only buy 14 mackerels per week. 14 times 500 inmates time 52 weeks is the amount of mackerels that are coming into circulation every year and that's why it was a pretty good stable value of currency."
"The reasons mackerel had value is because inmates believed it had value. Perfect example of that was mackerels expire after three years. But, people didn't jut throw them away, these became known as "money macks" and retained 75% of the value of "eating macks" because people believed that they still had value and they were still being used in transactions."
...that is at least until prison guards confiscated a massive supply of macks from one prisoner and essentially flooded the market creating a hyper-inflationary environment.
"I'll never forget the day where the macks lost all their value almost overnight. Someone had a huge amount of money macks and they got confiscated and the administration left them sitting in a bucket. They essentially introduced hyperinflation. They flooded the market with money macks."
Perhaps Yellen & Co. could learn a thing or two from this lesson in prison economics.