Date post: | 22-Jan-2017 |
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Why do we have money?
Convenience It is often easier to use money
than barter / trade Would you prefer to receive fish or
eggs instead of cash for the services you provide to your employer ?
Currency Debasement in China : 11th Century China – Flying Money. Called it “flying money” because it
could just fly from your hands. Banks had switched to the use of
iron coinage due to copper shortage.
These iron coins became over-issued and fell in value.
A bank in the Szechuan province issued paper money in exchange for the iron coins.
Currency Debasement in France : John Law was the first man to
introduce paper money to France in the early 18th Century
Louis XIV died and left 3 billionlivres of debt to his son, Louis XV
Louis XV required that all taxes be paid in paper money, which was initially backed by coinage
After high inflation, people demanded coinage, and the currency collapsed.
John Law became the most hated man in France and was forced to flee to Italy.
Currency Debasement in France In the latter part of the 18th century,
the French government tried paper money again.
By 1795, inflation of assigners was running at approximately 13,000%.
Then Napoleon returned the countryto gold coinage, a stable currency.
French gave it another go in the 1930s, this time with the paper franc. It took only 12 years for them to inflate their currency until it lost 99% of its value.
History of MoneyBartering & Exchange
Shells (1200 B.C.) Metals(1000 B.C.)
Paper Money (1000A.
D.)
Coins (600 B.C.)
Banking in
Europe (1400 A.D.)Wampum
(1637)
The Gold
Standard (1816)
Credit Card
(1950)
Plastic Money (1990s)
Google Wallet & Clear
Exchange (2011)
Electronic Money :The money stored in
certain electronic cash cards.
Transactions are made electronically.
Examples are Credit Card, Debit card, Charge card etc.
Features of Money :
Money should be durable, it should not get easily decomposed or degraded.
Money should be handy, easily transportable. Accepted – People are willing to accept Divisible – it can be divided into smaller parts Stable in value – The value of Money dose
fluctuate, but overall it remains stable. Limited supply – Supply must be scarce