Money! Money! Money!
Originally money took the form of commodities, commodity money. The oldest evidence of this was the use of ochre in Swaziland over 100,000 yrs ago. Later and in other parts of the world barley, grain, copper, silver and gold were used. During this time the loan of a copper/bronze bar would have been repaid with a similar bar of the metal and not with a bar and 1/10 of another bar as the concept of interest was not around, it was unheard of. There was no concept of money working for the owner or of it growing of its own accord. About 2,000 BC the codification of debts repayment emerged in Mesopotamia and Babylon indicating the establishment of a formal economy in a civil society. Around 3,000BC in Mesopotamia weight based units of value and by default money was established. The shekel was used as a unit of weight for barley; the Koku (a unit of volume) for rice in Japan; all the way down in time to Britain, with the Pound Sterling for one pound of silver. In Egypt this apparently occurred with gold even earlier, around 4,000BC.
Traditionally the material of choice is something that is rare and stable. Hence gold ultimately became a material of choice because of its chemical stability, almost inertness, A gold coin in the pocket does not oxidize and turn into dust over time, of course mixing it with mercury or cyanide will cause you some problems. However, there are few reactants for gold, coupling this with its softness it is effectively one of the most useless metals in the world, ironically. A recent exception in use is in the electronic industry where electrical contacts are gold plated to guarantee long life and corrosion free contacts.
Later, with the advent of Feudal Kingdoms, City/States and the establishment of their sovereignty, the establishment of coinage occurred. Coins were stamped with characteristic marks or signatures on variously shaped metals, bronze giving way to silver and finally silver to gold. These shifts led to significant turmoil in European economies and markets. Several wars were fought over the acquisition of gold and silver, colonies were carved out all over the world, mines established in South America, Asia and Africa, and human beings were enslaved to work these mines and newly appropriated lands.
During all this time the weight : value (commodity) relationship of the coins were maintained. The demand for gold was rising against silver, in England 1670’s-1680’s the gold based Guinea was rising against the silver based Crown (British coins), Britain decided on pulling silver out of their coins. There National Bank agreed to exchange the silver coins for gold ones and in 1730’s during an economic crisis there was a run on the Banks and the English Merchants rushed in to rescue the financial system.
Coins were later subjected to the seigniorage system in which the coin itself was assigned a monetary value, a value unrelated to the value of the weight of the metal in it. The effect of this is significant and requires a separate page for its expansion. Later still, coins were replaced by “paper” money, it was cheaper to be made and with any value assignable. These were designated as Legal Tender and was backed by a gold reserve. It was therefore possible to turn in your dollar notes for an equivalently valued weight of gold. In time of war, emergencies and other periods of national crisis governments have been known to introduce ‘Fiat’ money, i.e. money that is not backed by any reserves of another commodity that could be traded. Where a government prints Fiat money in excess of the value of goods and services produced in the state, ‘value’ is diluted and hyperinflation will result. Hence the need to judiciously balance fiscal and monetary policies. in 1971 the US came off the gold standard and adopted the fiat system.
Many persons, somewhat naively, clamor for the return to the gold standard oblivious of its associated problems which is not offset by its advantages. Modern money is simply a token of value and not necessarily a product in itself, having intrinsic or real value, except for its economic rent (cost of production, as in bringing it to the surface of the earth for metals, stamping, printing etc.) and its demurage (storage). These persons, also fail to recognize that the world’s supply of gold is finite, the potential value of human labor or commodities that can be produced is not.
Over the ages, especially with and after coinage was established, there has always been schemes to make money without creating value. In economics, this is called “Rent seeking”.
Since the earliest days money has been at the root core of most inter human and societal conflicts and problems. Before “money” it might have been resources, as in overlapping foraging and hunting privileges on the land. As primitive man drifted into agriculture it might have been watering holes for his animals and water rights.
Now it is entrenched Wealth & Money – THIS HAS BEEN THE UNDERLYING CAUSE OF THE RECURRING ECONOMIC AND FINANCIAL CRISIS that we face The various schemes, schema, methods, institutions, philosophical distortions, misinformation, etc., too many to mention here individually, are all designed to make money into a commodity, monetizing and trading it again, this will be the topics on this site. And the book Inequality. Underlying all of this is the subtle and deliberate transfer of wealth from one class to another. They will be dissected, analyzed and suggested solutions provided. WE DO NOT SEE MONEY CREATING VALUE, THEREBY MAKING MONEY. In the production process of the economy it only facilitates it.
Note: Money when used as a factor in the production process is referred to as Capital. Placed in a building or Factory with all the tools and machinery present it never produces anything of value. It is only when labor is introduced that value is created.