ORIGIN OF MONEY

Money has become such a routine part of our lives…
Its origin is rarely considered or understood.

So what is money? Money is a claim, clear and simple. Whereas money is often defined as a store of value, medium of exchange or a measure of value, these are only its uses, not what it is. Money is a claim for something of value.

The original groups of hunter-gatherers didn't need money as they provided only for themselves. Eventually they came to trade with other groups by direct barter, i.e. one to one, without money. Later, trading became more convenient with the use of indirect barter, i.e. trading into a common third party commodity which is then traded for the intended item. Practically every medium such as sea shells, bananas, cattle, land, metal and even women has been used for the third party commodity which become known as money.

With the advent of indirect barter, i.e. the use of money, trading was made easier and commerce was born. As man's wealth developed, gold and silver became the most accepted medium for indirect barter. Freed from a medium that did not rot or walk away, man began to accumulate wealth. As the goldsmiths had already built "strong rooms", people stored their gold with the goldsmith and received a warehouse receipt.

After people learned to accept the warehouse receipt in lieu of the actual gold or silver, the depositors found it was easier to get several smaller warehouse receipts. As these small warehouse receipts became popular they were used exclusively as they still represented stored value. Then over time, the goldsmiths became bankers and the warehouse receipts became banknotes.

Unfortunately, the bankers soon realized that the people rarely redeemed the gold so they began to issue duplicate warehouse receipts that is now known as fractional reserve banking. Eventually this fraud was legalized as the Federal Reserve System by the US government for their own unconstitutional motives.

Please join the Free Money Movement as suggested by Nobel Laureate F. A Hayek and become a Liberty Associate to grow and protect you money - one Liberty Dollar at a time.

Bernard von NotHaus
Monetary Architect