The Story of Money

The Story of Money

Eben Pagan from Self-Made Wealth tells the story of money and where it comes from. At first I found this a bit irrelevant and wondered why he was wasting my precious minutes, until I had a couple of valuable aha moments Myself.

I thought I would share his story of the history of money so you too, can put all this paper nonsense into some sense…..

He suggests most people fail with their money because they don’t actually get to understand how to use it.

In the early days, money really came from the ability to trade. The hunters would go hunt for food and find shelter in caves for their families. But with evolution came the concept of trade, the ability to learn new skills and produce products to trade. Trade then became imbalanced, as you then needed to find out how to trade an equal amount to make trading fair and more accurate. Like trading two cows and a lamb for three ceramic bowls and five fish. Was this an equal trade?

This meant that you had to find someone else to trade with first to be able to trade for what you really wanted and needed, bringing out some major complexities in the trading system. Thus currency was born – but not as we now know it — reducing the complexity of trades, a universal currency that anyone could use to pay for items or pay off debts. That currency was sometimes in the form of grains or rice until they found that often they would end up eating it.

Gold and silver was next as they were valuable; being rare, easy to carry around and used as other types of currency by being able to dilute it and even make jewellery or art, etc. The rise of the commodity money came about as it was possible to trade it or make something with it of better value to trade. Therefore making this money diluted and easy to inflate. Adding something to it or making fake versions of it became too easy, and so the note was produced instead to show or represent the gold/asset you held in bank vaults, like gold certificates.

Over time the notes were disconnected from the assets and became a PROMISE piece of paper. And what nowadays are known as notes/bills were converted to numbers on a screen. This is where the real problems started as us humans can’t compute numbers on a screen without something tangible, and therefore spending just seems easier and faster.

Governments can now dilute the value of our money by simply printing more notes, which in turn, causes us to deregister from what we perceive as actual worth. This is often why Australians like to buy property. They can trade money notes for a tangible asset and see the results easier with this kind of investment than trying to compute numbers on a stock market board.

For the most part, though, credit and online transactions have now made money disappear from our accounts faster than ever, which is just more reason to be financially aware and educated about where your money is going and how to best manage it.

Give Lou a call on 041 416 8326 for all the financial guidance you’re looking for.

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