How did humankind come to accept rectangular chunks of pulpy trees as something that they spend eight to ten hours a day on the job? It is a very crazy story. This change is from hard currency like gold or silver It is a really huge deal. Without it, we could not have the massive industry And the post-industrial economies that we know today. This change has revolutionized how we do business And it changed forever how governments were financed. Learn about this massive sea change About how we thought as types of money It can help us reflect on a current historical shift From seeing the paper as complete, and seeing the pieces, See those numeric and zeros and money.
But before we can get an interesting story from people Trying to convince others that paper was worth something, To understand why this deal is so huge, We have to debate a little about how we think about money before the paper. If we go back to the beginning of society, We find a trade. Before early humans even really settled, There is evidence that when we met we exchanged things we made or things we found. But once humans began cultivating the land and forming societies, We started to specialize And that means we didn't just like to trade, we had to. Now, when we think about trade we often think of long distance trade. We think of caravans loaded with exotic goods. But for our story, we have to talk about local trade. Because here we are faced with a coincidence problem wanted. Or rather, we encounter it everywhere. But if we fail to solve this problem at the local level, Society collapses And we don't have the specialized crafts we need to run anything Behind the smallest gathering of people.
So what coincidence he wants? This is the basis on which trade can exist. Let's say I'm making shirts, And you grow food. Well if you want a shirt and I want food, Cool, we can trade. But if I don't want your stupid food, or if I'm completely full Even on shirts, Well we can't trade, can we? And that starts to become a real problem for Community if you want food but don't want my shirts. Maybe I can find someone With some third good you want. But this means that a lot of time is Consumed by circulation. And if I can't find some other good stuff you want to trade, Well, there will be a problem. And this problem continues even deeper than us Think about sometimes When you think about the lack of refrigeration and transportation. imagine I'm a fisherman and you're a farmer, and let's say we want to trade. Well, that's the problem; Your harvest only comes once a year. I can't trade You do not have to harvest yet, and all those extra fish you caught It will be very rotten by the time your harvest comes This may sound very specific.
For example, trade for food may have been The most widespread trade in the ancient world. So we need to find the third good that we are You both want that we can trade for. But it wouldn't be comfortable if there was Some third world good that everyone wanted and will trade for? So we didn't have to do some long string of swaps every time we wanted something. Enter, money. All money is a third good that does not spoil and we all agree It has a value and thus becomes a unit of exchange; Good broker, using it All other commodities can be traded. And while we often think of coins made of precious metals for this purpose, the The truth is, as long as it is durable enough and hard enough to purchase, anything can As money.
Time Shadow: Turns We've used a lot of weird stuff Money on our history. For example, livestock often served as money. I mean, They're fairly durable, they last for years, It's practical, and it's reasonably rare. When the Europeans arrived in The Americas, alcohol often serves as a subtlety. You could literally drink your own Salary. Cigarettes often became the money of prisons and prison camps. Back in ancient China, money in the form of tools and then knives became some The first examples of precious metal coins. And, my personal favorite, is on the island From Yap, giant travertine cakes are served by Kemal. They are so huge once that Being brought to the island, Nobody moves them. They only remember who owned any of it. Actually, all of these The stones had to be mined outside of the island, because it does not exist naturally Limestone on Yap. And one time when the crew was returning from an expedition, a storm struck and They sent their stones down the ocean. But the crew survived and said Everyone happened, and the islanders decided that "still Come back. ”To this day, someone owns that giant piece of money stone into Seabed.
Although not really in use today, for hundreds For years he used this stone to buy and sell things, even though no one had it It never preceded, giving Yap, in some ways, one of his most forward-looking critical ideas Systems before the modern era. But if we want to talk about the king of all of them, The shape of the money used is longer and more than the widest area World, we have to talk about one thing. No, not gold. In fairness though, that's what I would very much have guessed. Nope, it is Seashell shell. It is durable, impossible to falsify, without talking Harvesting techniques are not that easy to get that inflation will work Rampant. Anyway, more than a shadow, once again targeting. We have many different possible types of pre-modern money, including gold And the silver coins that we often think when we think of money from the past. But all of these different types of money have one thing in common: they are What we call a money commodity, because its value is in the commodity themselves.
Even rare and beautiful queens were seen, and can be used for Jewelry and the like, and so it was thought of an intrinsic value. The same The way we feel gold has intrinsic value for its scarcity and uses. Now, that makes a lot of sense of accuracy. It feels safe and reasonable. You can trust the value of this gold coin in your hand. It means, after all, if you are used to trading one thing for another, Why do you trade in something? As valuable as a horse for something Worthless like a pile of paper? But for gold or for cowries, well that is Another story. But when your economy grows, this system starts showing some Its limits. For one thing, heavy commodity money. If you are doing huge deals, it gets really difficult to transport. And this is fraught with risks To move across lawless territories. Goods money is also often subject to Basement, where someone is. Usually the person who should be responsible for Be sure to keep the valuable coin, water down the whiskey, or take it A gold coin, he melts it, reconfigures it with a little gold in it, and passes it by Off is also worth the same amount.
But more than anything, when you get a behemoth Economies, and the scarcity that makes a commodity appear to have value Become your enemy. Like, let's take gold and silver. What happens when your The economy is growing to the point where you just can't get enough of it? We've already seen the effects of this in our episode on Opium Wars, where that is Much English silver was ending up in China in exchange for tea, It was actually causing inflation and hampering fundamental economic transactions Homepage.
And this really comes into effect when we get to a more modern government Funding, war financing. What happens to the nation when it is forced to make a sudden spike in Spending, but can not get enough specs to cover their cost? Even from those who are Ready to submit? Also I'm sure we'll see in the future, extra episodes of history Chaos plays with the economy, and even the ability to prosecute war. And the The opposite of this is also true.
Currencies are based on scarcity and are often subject to changes in scarcity The commodity you are based on, which can be a problem when someone finds too much More than your commodity currency. When did Spain start a huge task Quantities of silver and gold from the Americas, all existing precious metals The currency in Europe began to suffer from inflation. After all, all that gold The coins weren't worth nearly as much since someone had just thrown a huge new pile Gold on European shores.
The government, or even the financial sector, When someone digs a new pile of minerals it means you cannot control Your fiscal policy, then that's bad news. But those shortcomings are only It is easy to know if you are a head of state or working on a larger scale Deal. If you are just some average person on the street, I like to have some Rich people say they want to take your pills in exchange for this nice Slip … Is that paper? Well, you'd be forgiven for thinking that smell mice. Join us next time We finally delve into the origins of paper money, and begin to address this People problem for fear of surrender outdated gold..