What Exactly is Money and Why Do We Value It?

What exactly is MONEY AND WHY DO WE VALUE IT? EVERYBODY KNOWS WHAT MONEY IS mon-ey mənē/ noun: a current medium of exchange in the form of coins and banknotes. SO WHY DO WE VALUE WORTHLESS PAPER AND TOKENS? In 1971 US President Richard Nixon severed the CURRENCY = AMOUNT OF GOLD Even if currency = gold WHY DO WE VALUE GOLD? %3D tie between the US dollar So what is money and and gold, other currencies quickly followed suit WHY DO WE VALUE IT? THIS IS A COMMON MISCONCEPTION MONEY EXISTS BECAUSE BARTER IS INEFFICIENT, COMPLICATED.. AND MESSY CUTTING AN OX IN HALF FOR A ACCEPTING TWO BUSHELS SELLING ONE OX TO BUSHEL OF APPLES OF APPLES TWO PEOPLE WASTE WASTE COMPLICATION = HALF A ROTTING OX = ONE ROTTING BUSHEL = TWO PEOPLE ARGUING EARLY MONEY WAS COMMODITY BASED The currency itself (whatever it was) was universally valued WWWWWWW OR OR ПОООоо eg. 100 NAILS 1 SLAVE 10 COWS 20 BUSHELS OF APPLES TIMELINE OF CURRENCY CURRENCY OVER TIME OVER TIME, CURRENCY DEVELOPED CRITERIA BARTER UNIVERSALLY VALUABLE LIVESTOCK 9000-6000 B.C. DURABLE O) COWRIE SHELLS SCARCE BUT NOT TOO SCARCE 1200 B.C. 4TT METAL TOOLS PORTABLE 1000 B.C. DIVISIBLE MODERN COINAGE 500 B.C. Eventually, the value of convenience outweighed the value of commodity currency. LEATHER/PELTS 118 B.C. Paper allowed for Representative currency and banks L PAPER 806 A.D. 2$ 10 lb GOLD STANDARD 1816 A.D. Gold has been valued and used as commodity currency since early civilization FIAT SYSTEM 1971 A.D.- Present 4000 B.C. 1500 B.C. 560 B.C. 300 B.C. 1299 A.D. 1377 A.D. 1511 A.D. 1816 A.D. Eastern european Greeks and Jews Great Britain shifts Great Britain sets the Gold Standard tying the pound to an amount of gold practice Alchemy to a silver and gold monetary system cultures fashioned jewelry The first gold Egypt sets gold as currency for international Writes of the east King Ferdinand of Spain says to explorers, "Get gold, humanely if you can, but all hazards, get gold." "gold wealth was almost unlimited." coins minted in Lydia, a kingdom of Asia Minor trade -Marco Polo BUT WHY GOLD? ELEMENTAL SWEET SPOT - Gold Au it's the only element on the periodic table that is: 196.97 79 You can't eat it, it's too malleable for tools, plus it's heavy. NON-TOXIC BEAUTIFUL LUSTER GOLDEN, NOT "SILVERY" OR “GRAY" LIKE MOST METALS DOES NOT CORRODE OR TARNISH LIKE BRONZE AND SILVER JUST SCARCE ENOUGH SOLID BUT NOT TOO SOLID High value for small amounts but enough to Low smelting temp for ease of extraction from earth and divisibility. Items made in gold stay pristine forever. go around. All the gold ever mined weighs about 171,300 Total above ground gold is worth: tonnes. If combined it would $8.14 make a cube about 20.7m (68ft) on each side. TRILLION. human height of 6ft At today's price of $1346.60 US Dollar per oz. Which brings us to why we value worthless paper or "Fiat currency" As economies grew, Gold couldn't be mined fast enough to meet the world's demand for currency. The world's GDP is $71.67 TRILLION USD The world shifted to a less scarce commodity. That is about 9x the IMAGINATION current total value of gold THE VALUE OF ANYTHING IS SUBJECTIVE it is based on people's perception of worth and valued through relationship between supply and demand Fiat value, (value of a country's paper money) is determined by the country's perceived economic strength. DEMAND SUPPLY A profitable country produces useful goods and services. Although infinite amounts of money could be printed GOVERNMENTS LIMIT THE SUPPLY OF CURRENCY RAISES PERCEPTION IN CURRENCY SECURITY Demand for goods is high Raising supply of currency dilutes the value of each note Goods sold in X currency Raises prices: more currency to purchase same goods X currency has stable or rising value Higher prices lowers demand for goods Lowered demand lowers X currency value Presented by: ARE YOU LOOKING FOR SOME MONEY? BUYY DIVELOPED N NOWSOURCING Apply for a BudyLon Today: buddyloans.com loans Sources: nma.org/pdf/gold/gold_history.pdf bbc.com/news/magazine-21969100 investopedia.com/articles/basics/03/061303.asp pbs.org/wgbh/nova/ancient/history-money.html npr.org/blogs/money/2011/02/15/131430755/a-chemist-explains-why-gold-beat-out-lithium-osmium-einsteinium