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The History of Money
Choose from these words to fill the blanks below:
mood, eat, ideological, high, decrease, barley, political, tolerant, coral, bowls, 3000, counterfeiting, India, trust, Elliotus, other, status, cultural, Tunisia, Lydia, 2500, imagination, China, besmirched, wanting, 640BC, bronze, Muslim, monetary, sila, currencies, Denarius
how does money work?
why have people throughout history been willing to trade e.g. a fertile rice field for a number of            shells?
why are people willing to work for 8-12 hours a day doing things they don't entirely like in order to get at the end of the month a higher number in a field in a database in their bank?
the reason we do this is that we trust the collective                        that those shells or that higher number in the database will allow us to acquire other products and services that we want
           is the real raw material from which money has been minted throughout history
when people in ancient            traded goods for coral shells and traveled to the next province, they trusted that those coral shells could be exchanged for goods and services
money is the most universal and efficient system of mutual trust ever devised by human beings
how to create trust in money?
it takes a complex network of                   , economic and social relations to build this trust
why do I believe in the coral shell, the gold coin, or the dollar bill? because my neighbors believe in them, why do my neighbors believe in them, because I believe in them
the crucial role of trust in order to make money work explains why our financial systems are so tightly bound up with our political, social and                        systems and why financial crises are often triggered by political developments, and why the value of the dollar can rise and fall depending on the psychological          of the traders, and not on the objective condition of the economy
one way to build trust in money is to define as money something whose value does not depend on the imagination
the first money in history was Sumerian              money
appears in Ancient Sumer about          BC
about the same time and place that writing first appeared
barley was used to exchange other goods and services
most common measurement was one         , roughly one liter
standardized            which held one sila were mass-produced
salaries were paid in silas of barely
we have texts that say that the salary of a male laborer was 60 barley silas a month
a woman laborer earned 40 barley silas a month
an important manager could earn between 1200 and 5000 silas per month
obviously people did not        all this barley
it was quite an achievement for the Sumerians to build trust in barley grains
         B.C. Mesopotamia, first money with no inherent value: silver shekel
not a coin, just a measurement of silver, about 8 grams
a payment of 20 skelels did not mean 20 coins but 160 grams of silver
most                  terms in the Bible are give in terms of amount of silver, not in terms of coins
eventually replaced by money that lacked inherent value (e.g. people could not eat it), but was easier to store
silver had no inherent value: you could not eat it, and it was too soft for making tools: a sword or ax made of silver would be useless, silver swords or crowns or rings were              symbols, i.e. luxury goods that have no actual usage
the value of silver and gold was always purely                 
set weights of silver and afterwards gold eventually gave birth to coins
first coins were struck around            by King                  of the kingdom of Lydia (today western Turkey)
kind put some kind of identification mark on the coins
the mark on the coin indicated (1) how much metal was in the coin, (2) showed who struck the coin and how backed its worth
today's coins are descendents of these coins from           
advantages over lumps of silver
don't have to always weigh it
you could never be certain about the weight
mark on the coin increases trust in the coin, i.e. harsh punishment for                             
counterfeiting money has always been considered a much more serious crime than any other act of deception or cheating because when you counterfeit money, you are not only impersonating someone else, you are impersonating the king or government, an act of subversion of the rulers
the powers of rulers rests on the trust in money
Roman Empire could have only been maintained with trust in the gold and silver coins
the trust of money could cross geographical and even political borders
in first century AD, in the markets of India, Roman coins were being used, and new coins were often based on the Roman                 , and the name Denarius became a common name, even after the Roman Empire collapse, Muslim Caliphs made money giving it the name dinar, which is still the name of currency today in Serbia,               , Iraq and other countries around the Mediterranean
China also developed a monetary system but a little different
based on              coins, not silver and gold
as time went by,              merchants spread the European gold and silver coin around the world which became the standard in the modern era along with a few trusted currencies including the British Pound, the American dollar
this creation of monetary zones (zones of trust in a common money) laid the foundation for the unification first of Afro-Asia and later on the entire world into a single economic and political sphere
people continue to speak many different languages, obey different rules, worship different gods, but more and more people believed in the same money, first in gold and silver, and later in the pound and the dollar
without this shared believe, global trade networks would have been impossible, e.g. how could the Europeans have traded with China if the Chinese did not believe in gold and silver, and refused to accept payment in it
but how was this global trust in gold, silver, the pound, and the dollar accomplished?
why didn't it happen, e.g. that the Europeans believed in gold and silver and the Chinese continued to believe in bronze and the Indians continue to use coral shells
the very convincing answer is: once trade begins to connect to separate areas, the forces of supply and demand tends to match the prices of goods, and this applies to money as well, e.g.:
people in            not very interested in gold
in the Mediterranean, value of gold was         
merchants would notice the huge different of the value of gold, so the would take advantage of this, buying it for low price and selling it for a high price
the value of gold in India would also rise, and the value of gold in the Mediterranean would                 
the mere knowledge that people in the Mediterranean value gold is reason enough for people in India to start                gold as well
this is why Christian and Moslems who could not agree on religious beliefs could nevertheless agree on monetary beliefs
while gods ask you to believe that they have value,                      ask you to believe that            people believe that they have value: you accumulate dollars not because you value them, but because you believe that other people value them. This is why currencies such as silver, gold, the British pound, and the American dollar have achieved for all practical purposes total global belief in their value, something no religion has ever been able to do. Philosophers, thinkers, prophets, and poets throughout the ages have                      money, saying it is the root of all evil or the reason for the troubles in the world, but in truth, money is the apogee of human trust. Money is the only trust system humans have created which can bridge almost any cultural gap, and which does not discriminate on the basis of religion, gender, race, age or anything else. Even those entrenched in their religions because others don't believe in the same god as they do will often have no problem believing in and using the same money, even loaning large sums of money to people who believe in other gods. In this way, the trust system that is the most                  and the most able to bring differing people together to work on common projects with common goals, is money.
two characteristics of money
university convertibility
money turns almost anything into anything else
universal trust
has served to connect cultures throughout history and helped create the global world that we have today
in order to have an effective monetary system, you need the support of an effective political system and some shared ethical beliefs
you can't understand how money works without understanding its
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