The Hidden History of Money: Overview of Money
Compiled by Alexander James in December of 2010 & Revived by LOR in June of 2025
Today’s dollar is undefined unlike before, where it was defined as being 1/20th of an ounce of gold.
Thus, the measure we use to trade goods and services is elastic and not stable.
Keep this in mind as you read further.
Money is an essential element or object required to simplify, facilitate and expedite the exchange or trade of goods and services we produce.
Money can be any marketable good or token used by a society as a store of value or credit, a medium of exchange, or a unit of account.
It could be:
- gold
- silver
- a piece of paper
- a promissory note
- a certificate
etc., i.e. anything as long as it is readily accepted by most people in exchange of goods and services they deliver.
Since the need arises to exchange goods and services with ease and simplicity, societies create a money object when none exists.
In some cases, a central authority creates a money object; this is more frequently the case in modern societies with paper money.
However, that central authority has always been under the control of criminal mafias behind the scene, who are known as the Money Changers or Banking Dynasties.
Commodity Money
Commodity money bearing intrinsic value was the first form of money to emerge.
Under a commodity money system, the object used as money has inherent value.
It is usually adopted to simplify transactions in a barter economy; thus it functions first as a medium of exchange.
It quickly begins functioning as a store of value, since holders of perishable goods can easily convert them into durable money.
In modern economies, commodity money has also been used as a unit of account.
Gold-backed currency notes are a common form of commodity money.
The supply of the commodity money object, e.g. gold, silver, etc. must be readily available or major issues can arise.
Paper receipts can be issued for stored commodity money.
Commodity Money is usually a scarce good that is in continuous demand.
Many items have been used as money, from naturally scarce precious metals, shells, etc. through cigarettes to entirely artificial money such as banknotes.
Modern money (and most ancient money too) is essentially a token — an abstraction.
Paper currency is perhaps the most common type of physical money abstraction today.
On the other hand, goods such as gold or silver retain many of the essential properties of commodity money.
However, commodity money is in limited supply and cannot allow an economy to grow.
Token/Fiat Credit Money
The alternative to Commodity Money is Fiat money which is a credit money financial instrument created from “a promise to pay”.
A central authority creates a new money object that has no intrinsic value, i.e. a piece of paper or ledger/computer account.
The public’s use of the money exists only because the central authority mandates the money’s acceptance under penalty of law.
In cases where the public loses faith in the fiat money, the adoption of other substitute commodity money objects will arise.
Today, most money is actually credit money and is referred to as money.
Credit money or fiat money is a money substitute and not commodity money proper because it doesn’t represent an existing store of value and its value in terms of purchasing power keeps declining.
This distinction between money and credit causes much confusion in discussions of monetary theory.
In lay terms, credit and money are frequently used interchangeably.
Even in economics, credit is often referred to as money.
For example, bank deposits are generally included in summations of the national broad money supply.
Any detailed study of monetary theory needs to recognize the proper distinction between money and credit.
To function as money in a modern economy, a good or token should possess a number of features, i.e. it must be cheap to transact with, it must have a stable value, it must be difficult to counterfeit, it must be easily storable in a small space without deteriorating, divisible and transportable, and it must be fungible (one artifact of the token or good must be equivalent to another).
When using money anonymously, the most common methods are cash (either coin or banknotes tokens) and stored-value cards.
When using money substitutes in such a way as to leave a financial record of the transaction, the most common methods are:
- checks
- debit cards
- credit cards
and digital cash.
If money is kept in a safe and goes unspent, it reduces economic activity and loses its value due to inflation.
If money is kept in a bank account, it allows the bank to create credit money as much as 9 to 10 times the deposit amount.
The amount of money in an economy directly affects inflation and interest rates and hence has profound effects.
A monetary crisis can have very significant economic effects, particularly if it leads to devaluation of a currency or total monetary failure and the adoption of a much less efficient barter economy.
Modern economics also faces a difficulty in deciding what exactly ‘is’ money or money supply.
There have been many historical arguments regarding the combination of money’s functions.
Note that a dollar in 2006 is not equivalent to a dollar in 2007 due to inflation which we will explain later.
Thus, not all dollars are equal although they are alleged to be by the fraudulent banking system.
Note that inflation is not “income”.
CONTINUE
The Hidden History of Money: Origins of the Word “MONEY” – Library of Rickandria
The Hidden History of Money: Overview of Money
The Hidden History of Money: Overview of Money – Library of Rickandria