The Origin of Money

What is the origin of money?  These next few paragraphs will explain the process in a quick overview.

People traded what they had for what they wanted; like a person who had some apples wanted some potatoes and the person who had potatoes wanted apples, so they traded.  But this method doesn’t always work.

A person who only has an estate and a block of silver may want some bread but the bread isn’t worth his estate or block of silver so he can’t make a fair trade.  The baker tells the estate man that he will give him a loaf of bread for a bit of his silver block.  The estate man agrees to this and gets his bread.  Now the baker wants a pair of shoes but the shoemaker does not want to trade for bread because he is allergic to gluten.  Disappointed, the baker goes home and sees the piece of silver the estate man had given him for the bread, he immediately returns to the shoemaker and offers the silver for a pair of shoes.  The shoemaker agrees to this because the silver can be used to make a trade like the baker had just done and it could also be used to make jewelry or other things.  Over time everyone begins to use silver as their trading currency, money, because it is a valued good and most everyone will accept it in exchange for something else.

Since the silver is highly valued people want to have a safe place to store it so they deposit it into the bank.  The bank gives them a receipt for what they have deposited.  Over time people get tired of having to go to the bank to withdraw their silver every time they want to purchase something so people decide to use the bank notes to pay for things.  Those bank notes become the money currency and they have the same value as the silver because the silver is really what the notes represent.

That is the origin of money.

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