Money

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The dismal science

Economics

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...money can be a lot of things. It can be something that is hoarded, fought over, protected, stolen and withheld. Or it can be like an energy, fueled by the desire, will, creative interest, need to laugh, of large groups of people. And it can be shuffled and pushed around and pooled together to fuel a common interest...
—Louis CK[1]
How do we give change again?

Money is anything which serves as a means of exchange, a store of value, and a unit of account and represents only an extremely small fraction of the real wealth of any given society or country where it is used. Throughout history money has taken many different forms, such as sea shells, whale teeth, cocoa beans, pieces of electrum stamped with the seal of the king, and stone wheels. Most people tend to think of "money" as being synonymous with coins, or cash. But they are, in fact, two distinct things and have separate histories.

Contents

[edit] Types of money

a Fiat 500, bought with fiat currency

The first forms of money were used to take account of gift exchanges, typically in a ritualized ceremony when buying a wife, or as compensation for a murder or an injury to another, for example. Most resources were not traded for money and did not have any kind of monetary value assigned to them at all. When money was exchanged, it was usually meant to represent a relation between the two parties and not the value of the objects traded. During these exchanges, sometimes something as simple as a wooden stick could be used to represent an amount that was owed, as well as a promise to pay it back. Money in the form of coins made of rare metals were not used until the iron ages when large scale warfare made it necessary to have a unit of exchange that wasn't backed only by personal relationships, trust, and promises.

[edit] Fiat currency

Traditionally, money was backed by some sort of commodity, such as gold or silver, and there are some who liked it much better that way. Today, most money is "fiat currency" which has no intrinsic value except as determined by the government.[2] Cranks often claim that with the lack of a commodity to back them, dollars are worthless, forgetting that gold is just a shiny yellow metal that, for much of history, especially back before its high electrical and thermal conductivity gave it practical use, was only valuable because people decided it was.

Furthermore, "fiat" does have some solid backing; taxes. People with property must acquire money in order to pay their property tax, and the Big Bad Gummint doesn't accept Monopoly money. So even if everyone suddenly decided that things were better when you could sell your daughter for 5 goats, people are still going to accept money.

[edit] See also

[edit] External links

[edit] References

  1. Louis C.K. "A Statement from Louis C.K. (December 13, 2011)." LouisCK.net. 2011 December 13. [1]
  2. Technically, there are still a few coins in circulation that one could melt down for the metal, but it really isn't worth the effort.
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