The Evolution of Money

Historically, the value of money was anchored by the substitute costs and alternative uses of its constituents. For example, peppercorns and barley could be used for food, providing a stable floor for the value of money. However, because barley grows and is consumed, the amount of money produced decreases. Strawberries, on the other hand, are perishable and cannot be saved for the next month or used for trade between far away parties.

Throughout history, people have used money for all kinds of transactions. While most of us have handled it at some point in our lives, only a small percentage of us know exactly what it is. Money is a medium of exchange, a standard of account, and a means of deferred payment. As such, it is widely accepted. Throughout history, people have used various items as money: cowry shells, barley, peppercorns, and gold.

The most important feature of money is its status as a means of payment. In a democracy, money is a means of payment. It enables citizens to act together for the common good. Whether a society uses gold or not, it is essential to have money because it enables people to work together for the good of all citizens. Although money itself is not tangible, it is the symbol of wealth and a social power based on law.

While it is true that the ability to create money should be the primary function of government, the private banks create 97% of the world’s currency, effectively reducing the checks and balances system in most Western democracies. Political scientists such as Stephen Zarlenga argue that the power to issue money in any country has been captured by private banks. As a result, the money power has been completely displaced the check and balances system that is the cornerstone of democracy.

As a result, most economists assume that money was created for trading purposes, but this is not necessarily the case. Money was a valuable commodity, which was much more flexible than bartering. Even cattle, which were valuable commodities by weight, were valued for their value, making money a convenient alternative. But the evolution of money has influenced our perception of what we should value. Some people are more likely to value an asset based on its monetary value, while others may be more likely to prefer gold or silver as valuable commodities.

As a medium of exchange, money solves problems created by the barter system. Without money, people would have to barter with each other, a process that requires a double coincidence of wants in order to be successful. In addition, money serves as a standard for deferred payment. Without money, markets are unworkable. The ability to exchange money among countries has given people the means to conduct commerce in the modern world. There are numerous advantages to the use of money.

As a substitute for barter, people have long used trade beads in certain parts of the world. In western Africa, ancient traders traded these beads as money for a long time. Eventually, Venetian glass beads made their way across the Sahara. This practice helped the merchants trade in exotic commodities and goods. By introducing European technology into these areas, they were able to produce more durable and valuable goods. Those settlers eventually became the Japanese Empire and used the same tactics on Southeast Asia as the Europeans did in Africa.