Please enable JavaScript.
Coggle requires JavaScript to display documents.
The History Of Money, Island of Yap:
-chief asked their taxes in race…
The History Of Money
Early Money
-In small communities people exchanged products keeping tallies to motor who had been paid and who hadn't
-rulers began to impose taxes
-hard to keep track of exchanges
-IOU notes were hard to enforce, so ppl started using objects as IOU
ppl were free to trade with anyone and store their tokens
humans invented money - humans invented debt
Metal Money
ppl realised:
-tokens should have intrinsic value or it would be hard to sell outside the community
-money make ppl powerful - powers attracts money
-kings started to minting coins from precious metals that guaranteed their weight and value
-if put cheeper base metals - make more money
Paper Money
-keep coins in the palace, issue IOU on paper for long distance trading
-IOU papers had no intrinsic value - ppl believed in it
-IOU papers could be exchanged for gold and silver when represented
-tried to link the value of money to the value of gold
Gold became the standard for exchange
-
Money and inflation
in 16th century Spain brought gold and silver from the colonies - more purchasing power - prices were put up to match purchasing power - those in debt profited
too much money + too more good = inflation
International money
18 century America:
-high taxes
-lack of control over money
After the war of independence:
-american dollar was created
-became the most widely used currency due to vast trade and trustworthy tax base
Money and building banks
19th century:
-banking - respectable business
-banks paid lower rate of interest for the money they took in than loaned out
-if depositors didn't ask for money - they can lend out much more (fractional reserve banking)
-insured deposits by the government
-
The power of money
the world trades in dollars - us increased supply of dollars - a big fall? - not yet - ppl have faith in it since they hold it
Future of money
98% - online banking
digital transactions enable new currencies (bitcoin)
but until they are taxed - no difference from a token
Island of Yap:
-chief asked their taxes in race tones (similar to gold, enormous size and weight)
-currency became universal, unavoidable, under the control of the chief
-left race stones in one place, trade in promises
-a trader with a race stone could issue a promissory note against the value of their stone
Banking was born