Many individuals mistakenly accept that cash approaches gold in a bank. This isn't accurate nonetheless, how about we start with where cash truly comes from, for that we need to comprehend the account of humankind mankind at the outset we were tracker finders we had no fixed space in the world and just carried on with life through the exchanges of "you need this, and I can utilize that" basically that trade was what drove our economy, and we have evidence that trade existed well before language existed.
After that humanity started to group in concentrated areas because of the advancement of horticulture and things like fishing which appeared well and good for clans to be in one spot to expand the extent of food they had the option to have instead of being everywhere in the world. So trade was still essential for our economy even once we were ranchers or anglers once we were presently don't just tracker finders, anyway 2 things happened that made a huge difference.
We should dissect every one of them:
First the trade had an enormous issue, if indeed I could have practical experience in agribusiness and another person in the town could work in making garments then I would specify to him "you need 2 sacks of oranges in return for those jeans" and the person would make reference to "that bodes well the bit time it took me to make these jeans is the extent of time it had taken me to make the two packs of oranges" he would get them from you, anyway oranges decay, food spoils, the things that we are trading for cost in the event that we don't trade them for that cost quickly we couldn't actually change over them into an enduring expense we don't have the chance of changing over them into riches.
A rancher who might take rice at times planned to lose his harvest over the long haul and that cost was not sturdy, so we expected to find something that was halfway that was an expense intermediary that would work for the person who made the jeans and the person who planted the oranges, or the person who got the fish that before long-lost expense, a fish had a colossal expense whenever it was removed from the sea and an expense near zero 10 days after the fact.
Then we began to understand that the rules for achieving cost trade-offs were more or less these:
Well if there was a lot of whatever it was that we were doing we fall into another problem which is inflation, once there is enough of something its cost falls and that's where gold comes in right? No gold doesn't come in there it doesn't even come in from far away it comes in much later.
We have quite old records from Mesopotamia or even the whole Egyptian world where the first common cost factor that was used to trade values in the human race was cattle, especially cows, because cattle lived long enough over and over again it kept generating cost, and it served all kinds of individuals, by the way in many civilizations cattle are still traded for example once they stay procured, they are still traded for example once they stay procured, they are still traded for the same reason, they are still traded for the same reason, they are still traded for the same reason.
For example, once they remain seeking to make arranged marriages that is the very deep cost of cattle and generally all kinds of animals that we ourselves had in the past occasionally we have provided that since it is quite difficult to move a cow from one set of nations to another set of nations especially if I am a Japanese seeking to do business with a Chinese, or I am in Italy in another so much to do business with Culiacan along the Silk Road.
So we went back to the next thing that is certainly not gold, they are the ocean shells each of these ocean shells especially the marquez shell very small, white and round, became our first transaction cost skill first as they were quite few priors to our ability to drag the ocean, it was very difficult to get them more than anything else to get the perfect shiny and beautiful ones, and number 2 because apart from the cost they had at transaction level, they also have a cost very similar to gold, a lot of jewelry and dress things were made for men and ladies that were a sign of status with these shells.
The second thing that happened is a little more interesting and that is that as humans began to live in fairly huge teams we began to develop a culture, as we began to worry about our property, the development of ownership did numerous things exemplifying the hunter-gatherer tribes did not have a criterion of monogamy was all with all and the son did not own a father, all the fathers were all the tribe, however once we started to own property this is my home, this is my husband, this is my son, this is my wife, this is my piece of rice, this is my cow.
Of course this started to produce bigger and bigger cultures, such as the Babylonian gates that you have the possibility today to see this way how they were in the era in the parchment museum in Berlin, and this made people come with a lot of strength, the strongest individuals of the tribe, and they began to be the strongest individuals of that mini-city, of that mini-village, and they told the rest of the population "bandits are going to come, I will save you, I will make sure that they don't harm you, but pay me" and then the farmer of the era, the simple common farmer didn't even have the initiative of these already or that I pay you, but that supposes that I pay you what you want and what they wanted which is the same that many of the feudal lords and the kings of the era wanted, it was quite easy since pay me with a percentage of what you plant and that became the feudal empires pay me with that percentage the problem is that in the era the population didn't understand what percentages were, it was like a little of their harvest and I save it.
However, how much is a little, we haven't invented fractions I don't know how much is 20%, however this ends up building something called taxes and of course the farmers and the other countrymen of the era keep mentioning however as I pay taxes I don't know math and the paramount chief of the era was feudal lords mentioned "neither do I what do we do" and this gives start to mathematics originally is created as the emperors feudal lords and generally people with various muscles and huge skills for mistreatment of the era, they needed a way to measure how much money they were owed by all the countrymen in the village and that occasionally gives rise to language which from time to time gives rise to culture.
Then we evolved from this instant where our money was based on ocean shells to a point where exemplifying the Italians for a long time started using Parmesan cheese wheels as their way of bartering money especially on the Silk Road, because it was simple to move, if it is a cheese wheel, difficult to counterfeit, it is quite difficult to explain a durable Parmesan cheese, stiff for many, many years it was quite scarce because they only made it over there in the strangers in Italy.
The Chinese realized that this was a problem and started to generate money based on a commodity based on a raw material, i.e. gold, silver and iron, and they made these coins.
the reason why these coins have a little hole in the middle is because the way we measured them in the way we measured how much money we were giving out, is that they have different size strings, so depending on the size of those strings, is that we knew exactly how much the coins weighed and whether we were offering you something for more or for less.
problem of having money based on a scarce commodity like silver or gold is that nowadays with the fluctuation of the price of silver or gold or any other currency people start to dilute the value and many coins were mixed with iron instead of gold just to go the value and that created a whole generation of people who had to think them together with real gold to know if they were being knocked down and it also creates the reality that sometimes it can become completely worthless money, this happens for example the U.S. government, the metal with which the coins are made is the metal with which they are made. This happens to the U.S. government for example, the metal from which the penny coin is made is much more valuable than what a penny is today, so many people simply collect them to melt them down and it does become a problem.
It's not until the mighty kublai khan which marcopolo talks about in his stories decides to start creating some iron blocks that I'm going to give to the people who represent me to represent value and eventually people said hey these iron blocks are really heavy how about I fill the iron block with paint and print it on a piece of paper, and then the ming dynasty said what a good idea let's print a bunch of paper out of this and that's the value that we represent and so begins money based on basically drying the bark of a tree into sheets of paper however this also created our first big mega inflation because eventually the Chinese citizens of the ming dynasty, realized that paper meant nothing and probably had no high value and when they tried to extract value directly from the government, it ended up creating one of the most interesting collapses in the history of civilization which was the financial monetary collapse of the Ming Dynasty inflation that will be repeated many times throughout history.
What happened in Europe is that there were goldsmiths, the people or goldsmiths who were the people who were experts in manipulating gold and these people had to build gigantic vaults to keep their gold and eventually other goldsmiths and other people told us especially merchant people hey why don't you let me keep the gold with you you should keep the gold and copper a little bit ready I let you keep the gold in my life and what I will do is that I will give you a receipt for that gold and those receipts the goldsmiths realized that people were exchanging them "because look I have gold stored there in Mr. Christian's vault so I took this paper and this is the value and this is the power to recover it" and the goldsmiths said to us "because look I have gold stored there in Mr. Christian's vault so I took this paper and this is the value and this is the power to recover it". gold stored there in Mr. Cristian's vault so I took this paper and this is the value and this is the power to recover it" and the goldsmiths said "this is interesting" and so a number of families among them the Medici family said why don't we stop being goldsmiths and make gold and make gold and why don't we make gold? goldsmiths and make gold and make more vaults and make a whole network of vaults and make a network of messengers on horseback to exchange messages between the vaults so that if I put gold on one side I can get it from the other side and they created the first banking networks, so now this is where this paper starts to be worth the equivalent of gold but that does not mean that people will think "but what do I create with this paper" imagine that suddenly in some Italian city in Rome, in Venice and the different banks are delivering these papers but you go over there to a village in Sicily and people will say "what is this? "the government eventually around the beginning of the 19th century realized that it was very important to standardize the value of these coins especially because the banks in it from the renaissance to the 19th century did very crazy and very unethical things with the people something that banks never do anymore right? , right?
What they end up doing was very simple because they made that the only way to pay taxes is with these papers and suddenly boom does not make the money as we know it because with that money taxes are paid is that that money begins to have global value because it has the trust validity solidity validity and above all the capacity of violence of the state to make that money worth, and the paper money meets all the rules that we have aside what is needed for money, but it also brings another series of problems for example inflation which is when we print so much money that the value of all the money that we need to pay taxes.
and paper money complies with all the rules that we have set aside what is needed for money, but it also brings another series of problems for example inflation which is when we print so much money that the value of all things starts to be worth more because there is too much of something in particular in this case too many paper notes, I also know that the concept of insurance, an insurance at the end of the day is that a group of people unknown to each other put together a little bag of money so that in case one of them goes bad it does not send them to bankruptcy and we all support each other, that is why life insurance, health insurance, accident insurance etc. are so important, there are also loans because the banks realized that the money that people left them did not take it out and they stayed there after a while, then the money was left there for a while.
and that created fractional banking which still exists today, and of course speculation which is sometimes the opposite of inflation and very similar to what happens with things like bitcoin or gold or oil where from the scarcity and movements of how much I think something is going to be worth in the future I can manipulate that market.
Interesting things also began to happen the creation of the telegraph created a company called western union that initially a company that simply moved telegraph messages from one place to another at one point realized that some telegraph messages were simply notes in what they call a ledger or one or an accounting book I hear you see me so much money you do not remember that when you come back here candle you have to pay then you also said because I do not have silver bags from one side to another and since I am able to move messages at speed of light thanks to the telegraph line I can move money and that's how they began to send messages by money telegraph and then the money lost the physical concept because you were no longer moving papers from one place to another or blocks of gold or coins from one place to another suddenly with the western union telegrams you were moving money not even digital me because they were electric waves but you are moving money electrical money that did not exist was the end of the day virtual money.
Obviously this generates serious problems where eventually it makes us think the money has some kind of value, for example it generates a kind of loan cycles I lend him money and with this money he lent money to another who lent money to another prisoner to another and ended up creating a synthetic ball of loans so big that eventually there is a day where the loan bubble bursts and creates cases like the global financial crisis in the 1920s in the US where everyone seemed very suspicious that there was so much money in the market they went to the bank to get 100 percent of their money there was no the stock market collapsed and everything exploded but we don't have to go that far, this happened in Argentina at the beginning of the 21st century and it was known as the corralito and has continued to happen in multiple other economies
The important thing is that these bad behaviors are the ones that will end up creating rules, laws and institutions, institutions such as central banks, federal reserves or monetary funds to control both the movement of money and the movement of value behind money at the end of the day is in 1930 where England takes the first step so that eventually at a global level the money that is based on paper must have an equivalence in gold, I have an equivalence in the confidence that citizens have about the solidity of institutions and sovereignty of their government.
This leads us to a problem that we have been a humanity all our lives we do not understand what money is so we have a wrong concept we believe that the economy is a zero-sum game and it is not we believe that if I win someone loses and this is the basis of many closed concepts such as socialism and communism that create a lot of misery in the world at the end of the day, it is not true it is as if you said that why larry page and sergey brin when creating google and becoming billionaires did that A series of families in Zimbabwe will run out of money not because when I create something I am increasing the value of the economy and because in a digital world the economy is post-scarcity that I created this blog and it is seen by a thousand people ten thousand people or a million of people does not make other blogs see less people or that other blog authors in hive have less money is not a zero sum game, it is not like I remove a piece of the country and then someone else does not it has it because what money is is not that our economy is a positive sum game every time we create something something better is created is the reason, for example, why the idea of prostituting the market of software professionals does not exist Because software is a post-scarcity economy, the more people make software, the more software is worth, just as the more artists there were in the Renaissance, the more value art had because all creative economies of knowledge are not economies.
extractives yes yes I extract the oil because someone else cannot extract that oil afterwards he lost he created software more people are going to use the software the economy is not a zero-sum game and that is important to understand because a lot of the closed concepts of the money especially in a world like the one we live in today where money is digital and basically infinitely replicable obviously money does not open to being infinitely replicable we have cases of hyperinflation such as Venezuela or many other countries in Africa
We also have the case of a money that exists based on mathematics and crypto currencies meet the same rules. It is easy to move, it is difficult to fake, it is durable and it is scarce, but even outside of crypto currencies we begin to see digital money, if you go to any small store in China today you will find
this picture,
they are going to find that the person who is lying in the store more than accepting less ones is going to accept that their phones take a picture of these QR codes to pay them through we chat or Ali Babá, but we don't have to go So far we can also see that in Japan and Korea there are line pocket money where teenagers, instead of borrowing money, spend money through their phones, surely at some point with a credit card or with cash at a point of payment. They put an initial money but since then they have been trading 100% based on their phones and it is money that does not exist and it works almost that it was a parallel network making applications like line or we chat 100% a bank in fact you begin to see it in USA if you travel through the USA you will see that many places receive payments and also receive tips through paypal an application of square day actor is called houses that works with block sing or venmo which is an application now paypal but before it was simply a system that worked on ago
It is even happening in Colombia if you go to a grocery store to buy a market you will find QR codes of a startup called you pay that is doing incredibly well and of course if you go to any other restaurant or store you will find the bodies of rapi pay that is equivalent to what we have in we chat and all this is virtual money all this is not money that really exists on paper but that at the end of the day is a value
Where the value of money comes from
Let's understand what money is
It is the way in which we buy the time of others and we transfer wealth those bills that we have in our pockets. It is the formula that I buy time for another person, their time to make an ice cream, their time in which they were transporting an apple, its time to do the cleaning in the house. salary is a recurring monthly subscription to a person's mental abilities and a dismissal or resignation is a recurring monthly subscription turn. That's all money is, it's a way we buy other people's time and transfer wealth, it's not gold.
