All about Money

 

Forewords:

As you know, this modern world is centralized with the power of Money. Ranging from buying products to gaining services, from leather to gold, from job to business; every single transaction is based on these mere pieces of paper. 

But, do these pieces of paper have any value when no one accepts it from you when you intend to purchase something you really desire? For instance, think about using foreign currency in your native region. Will anyone accept Dollar from you when the only acceptable currency in that region is Euro or Pound?

We will learn about the history of how the paper money got this much invincible power worldwide.

1.  Barter System:

It was prevalent about 17000 years ago. During that era, every man & woman has to earn their own food for survival. But unfortunately, many humans remained unsuccessful to hunt their preys. 

So out of hunger, they had to search for food in convenient places such as, other groups of humans or tribes. But whenever they went near those tribes, they wanted something in return as their profit.

Since then, the mode of trading started for the very first time in Human Civilization which is well known as the Barter system. Such system was first introduced in Mesopotamia civilization. 

Beside this, some people also decided to try out stealing & snatching foods from others. But in this way, some people from their own tribe as well as some men from the foreign tribe become injured due to brutally defensing themselves. 

That's why back then, this method is stealing is completely aborted within a matter of few days. Only trading allowed the primal Humans to become passive with each other from being aggressive.

2.  Commodity Money:

It became prevalent about 1000 years later than the origin of Barter system; that is, ~16000 years ago. Within this long period of time, the Human Civilization had learned & started Farming, Agriculture, Fishery & Poultry. 

Versatile Marketing had also been originated by this time. Diverse products have been appeared across those primal markets. People are habituated in trading several things with respect to whatever they have, which were not necessary for their own personal lifestyles. 

In this case, a major problem raised among the communities. They cannot exactly describe to their close ones what things they had bought with the price of which of their own commodities. 

This is why, the Tally, counting, symbolic methods became popular for taking the accounting of whatever they traded on a specific day. 

Commodity Money is actually defined as making those personal assets into money which is unnecessary to the individual. It ranges from cows, goats, pigs, horses, wool, leather, fruits, minerals up to even humans. 

Yes, the Slavery system was also introduced in the era of Commodity Money.  Few people would rather purchase human (either male or female) as slaves with respect to their useless commodities in order to fulfill some of their personal desires.

3.  Coin Money:

It became prevalent about 134000 years later than the Commodity Money system; around 2600 years ago. The people realized that it became impossible and inconvenient for them to sustain a desired lifestyle in the long run by following the same trading system.

Because sometimes, many individuals would not find anything to trade at all, as every commodity and resources were necessary. 

And another reason is, due to the prevalence of versatile goods. Few people were ought to purchase cheaper things with respect to one of their expensive things. For instance, a person buying any alcoholic substance with respect to one of his metallic things. 

Now here is the deal, it is illogical to trade in this irrelevant way of pricing. As a consequence, after thinking for several days, the elite or high positioned members of the community have collectively decided to create and introduce a new independent medium for trading necessary goods. In this way, the prices will rationally be payed without further facing any form of deprivation. 

Therefore, numerous coins made up of Iron, Copper, Silver and Gold were produced according to the plan. First ever currency in the Human Civilization is introduced through those metallic coins.

Business & Merchant systems were also originated as a consequence of the introduction of this Coin system. 

As the flow goes on, human communities from other global region gradually started learning about this primal currency system. So, the Global level of trading; also known as the Overseas Trading became famously popular across the world. 

Proportionally, many people also started their lifestyles as Pirates for the purpose of stealing coins & goods from the Merchant ships. Although it was still possible to somehow resist the Pirates from doing so and defend own goods, it became pretty much harder to bring the sacks of coins back to own region via the ship. Because, those sacks became dense and heavy masses after fulfilling the purpose of Merchanting. 

It turned into an unavoidable problem to the foreign Businessmen. So, they initially thought about introducing another form of Currency which will be much lighter than these dense materials.

4.  Paper Money:

The Grandson of Genghis Khan named, Kublai Khan has initially started the tradition of paper money system as a medium of only banking up the valuable things from general people such as; Gold, Silver, Ruby, Diamond, Iron, Copper etc. A text was written on the surface of that paper, I.O.U. which means "I owe you" referring to the debt of returning back the trust of valuable items.

Public thought that since the person who owns this paper can easily get back the trust of those valuable items from the king. As a result, they started utilizing those papers for trading purposes so that they might not have to take the risk of carrying such valuable things across the public areas. You already know what would generally happen if those were only kept inside the pockets.

This system of banking valuable goods with respect to lending definite papers has been globalized. In that period, no one would imagine that this paper money will become an absolute central source of all existing powers.

Due to the power of its popularity, some people initialized an independent Monetary Bank system at a formal level. They started massively collecting valuable trusts from public and giving them I.O.U. papers in return as a reference. 

In this way, Bank is actually earning valuable resources by lending mere papers to the general public. 

Meanwhile, the Bank Authority wanted to earn some profit themselves. So, they started giving loans of I.O.U money backed by gold to other people and gained additional profit by returning the gold back. This was the first time in history when Interest is introduced among the society. The money which is safely backed by gold or any other precious metal is known as the Symbolic Money.

By this time, they realized that the value of paper money is gradually getting greater among the social communities. That's why, the Banking authority decided to produce I.O.U. papers several times more than the real value of gold. 

As a gradual consequence, an economic problem called Money Inflation started for the very first time. For example, the prices of leather products were increased from 1$ to 10$ according to their primary currency. 

After realizing this Inflation issue, people wanted their valuable items back but, found scarce amount of assets in return. As a consequence, Public faced a huge betrayal from the Bank. So, they started to keep their own valuable goods i.e. Golds, Silvers, Coppers & Irons secured within their homes. Meanwhile, the transaction system of I.O.U. papers became reduced by a great extent. Former economic problems had appeared once again.

4.  Currency based Money:

Later in the year 1816, the Great Britain decided to create, initiate, introduce & normalize a completely new Monetary System. The former money inflation issue helped the Europe to get limitless credits and it played the main role in forming the European Industrial Revolution. 

So, it was decided that all the fiat money would be transformed into the fraction based paper reserve of Golds. That's how Fractional Reserve Banking came into its existence along with the creation of Central Bank. 

This Financial theory has been globalized

Due to the prevalence of WWI, many countries suspended the conversion of Gold from the money.

In the year 1913, USA decided to generalize the Gold Standard from the concept of the Great Britain and create independent Monetary system called Dollar system (or USD).

In 1925, France & Switzerland including Great Britain also joined the same Standard of Gold. According to ScienceDirect's definition; the Bretton Woods system (1944–1970) was an adjustable peg system, with every country fixing their currencies to an anchor currency (the US Dollar) and the value of the anchor currency was fixed to Gold.
It is also called the Gold Exchange Standard or (GES) system. Meanwhile, other countries kept Dollar, Pound and few Gold in their national reserve.

In the year of 1944, USA decided to globally make tier own currency i.e. USD into the main currency. Which means, no other currency than Dollar can be directly converted into Gold. Only this US Dollar is backed by the commodity of Gold & Silver. 

Such Monetary System also brought unprecedented greed for Money.

However, American Government blundered by doing the same mistake in regards of having the Vietnamese war. That is, they printed multiple Dollars which was not backed by gold. 

As a result, dollar inflation started, the occurrence of same former economical issue. When the great Britain wanted to redeem their Golds back, US realized that it was not possible to do so due to this increasing inflation. 

Right after the year 1970, fiat money started its journey again. The logic was, you need law to enforce people to take this useless paper money as payment for providing real goods or services. Such decision is known as the Nixon shock.

According to the definition given by Wikipedia, The Nixon shock was the effect of a series of economic measures, including wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States Dollar to gold, taken by United States President, Richard Nixon on 15th August, 1971 in response to increasing inflation.

Many countries started printing more and more Money by violating the Gold-Standard of the Great Britain, resulting in another Major Money Inflation. GDP reduced by a great extent.

From the year 1929 to 1939, the Great Depression appeared in the USA along with many other dependent countries. It is the first Financial Crisis witnessed by the Human Civilization which threw a huge negative impact across the world. 

It increased the rate of Unemployment besides the Inflation issue. Sharp decline in Stock Market. Prices of necessary goods raised to the level where general public could not afford them.

Origin of fiat Money and printing them on an international level. Fiat money represents such currency which is not backed by gold or any other precious metal.

The Federal Reserve System (FRS) has defined a certain limit of printing Paper money for taking the central control of the monetary system in order to alleviate financial crises, as mentioned above. Although Paper money made the lives easier & convenient, those were not used appropriately in the long run.

5. Digital Money:

In the year 1980, the globe witnessed a revolution in the Monetary System i.e. the Origin of E-Money known as the Swift Money based on digital platform for the intention of conducting instant transactions worldwide. It was obviously safe, portable and quick for the general people. But, the real problem was Hacking.

Several hackers across the modern globe had exploited this digitalized monetary system for gaining millions of dollars inside their own wallets. They also got caught red handed by the cybersecurity authoritarian groups around the world.

6. Cryptocurrency:

Due to this hacking issue, Cryptocurrency started its journey in 2009. Initially, the primal currency of this system is Bitcoin which had no financial value in USD scale at that moment.

There is no official information of the Originator, except his name. His name is Satoshi Nakamoto. He was Japanese but, the Government does not even know his current location or address; let alone his other Identical information. You can call him a completely Anonymous/Ghost person.

Since it is Cryptic, it has no connection with the Government, so it also does not have any rulings. Therefore, it is totally illegal to use cryptocurrency for formally financial purposes in the eyes of law across many countries.

2011: 1 BTC = 1 USD

2021: 1 BTC = 60000 USD

2024: 1 BTC = 63641 USD

Reality based Conclusion:

Behind the drama of solving commodity related problems, various Monetary systems that were introduced across the human history only brought us more new problems over time.

Today, you will need to work from 9 to 5 like a donkey in order to witness the digits being increased inside your Bank balance and fall into the illusion of getting more money, but getting nothing for real.

From prostitute to businessman, everyone desires money. Nowadays, there is nothing more valuable than these worthless papers containing some mere number with a symbol of currency. 

Rat race turned out to be more common thing nowadays. People tend to take more loans and mortgages for the sake of having some temporary pleasures. The life filled with Luxury is the main desire of almost all of these rat-racer people. 

So, they buy unaffordable products, cars, houses, services, etc. only for satisfying such primal desire. Behind the curtain of their unmatched happiness, there exists a huge level of financial crisis that grew up due to taking the wrong financial decisions.

Trading →(17000+ years)→ Invisible (i.e. Digital) Money

the only acceptable, appropriate, stable & pure currency is Gold & Silver coins. There is no possibility of facing Inflation by being the owner of such currency. 

It is considered that this currency is god-gifted for us, one of His bountiful blessings. It is the only stable currency since the beginning of Human Civilization.

But still, Financial literacy, Money management, Economic strategies, etc. are the prerequisites for ensuring a life enriched with Financial Freedom in this modern monetarily active world.

Some points regarding Financial Strategy is given in the following:

• Establish multiple sources of income. Because, if you only rely on a single Income source then you're just one step away from being a victim of poverty
• Create a Budget chart of your overall monthly expenses. It will reduce unnecessary expenditure by a great extent thus, filter out all the products & services you actually need in real.
• Deposit a definite percentage of earned money inside a secured place for indefinite future requirements and urgencies.
• Ensure 2.5~5% of your total unused wealth for Zakat, charity giving, and other forms of donations. It would only bring you prosperous quality of wealth instead of wealth reduction, since it is an illusion served by satanic mindset.

Last Quote:

The more you learn,

The more you earn