History Of Money

Courses : Intermediate Macroeconomics Lecturer : Frischa Adellia Semester : 4th Semester, 2022/2023 Sesion History Of Money The History of Money: From Barter to the Modern Monetary System Money has been an important part of human life for centuries, and has undergone many changes throughout its history. What follows is a brief overview of the history of money, from the early barter system to the modern monetary systems used around the world today. Barter System The barter system is a form of trade that emerged in prehistoric times, in which goods and services were exchanged directly without using money as a medium of exchange. This system has been used by various tribes around the world for centuries. However, the barter system has some drawbacks. The exchange of goods and services in the barter system is very difficult because the relative value of different goods is not easy to measure. In addition, it is difficult to find people who have the items they want and who are also willing to buy the items you offer. For example, a farmer who has excess grain may exchange it for sheep from a breeder, or a carpenter may exchange a chair he makes for fresh fish from a fisherman. The barter system can be used in local, inter-tribal, and international trade. Although the barter system could allow people to obtain the goods or services they need without using money, it has several drawbacks. The exchange of goods and services in the barter system is very difficult because the relative value of different goods is not easy to measure. In addition, it is difficult to find people who have the items they want and who are also willing to buy the items you offer. Because of this, the barter system is often used in emergency situations or when there is no other option. However, in modern economic systems, money has become a more commonly used medium of exchange, as it facilitates transactions and allows the values of different goods and services to be measured and compared easily. Commodity Money To overcome problems in the barter system, humans began using objects that have intrinsic value as a medium of exchange, such as ivory, animal skins, or gems. The first commodity money used was gold and silver, which were universally recognized as having high intrinsic value. In the past, people often cut gold and silver into coins of various sizes and weights, which allowed the relative values of different coins to be measured easily. These coins are then used as a medium of exchange in international trade and commerce. Modern Monetary System The modern monetary system began in the 17th century, when central banks began issuing paper money as a form of money. Paper money was originally backed by gold and silver held at the central bank, thus allowing one to exchange paper money for gold or silver. However, in the early 20th century, most countries abolished the gold and silver standard system, which allowed central banks to print more money than they had in stock of gold or silver. This allows the central bank to influence the supply of money in the market and influence inflation and interest rates. Today, most countries have a modern monetary system, in which notes and coins are issued by central banks and used as a medium of exchange in commerce. Electronic money and crypto money are also gaining popularity, which allows one to make payments and transfer funds online. The importance of money as a medium of exchange is universally recognized, and is an important part of the modern economic system. However, changes in technology and consumer behavior have affected the way we use money. Cryptocurrencies such as Bitcoin and Ethereum, which were developed in 2009 and 2015, are increasingly being used as a form of digital money. Other digital payment systems such as Apple Pay and Google Wallet are also growing in popularity. In addition, monetary policy and macroeconomic policies have played an important role in the use of money. Monetary policies such as interest rates, cash reserves and exchange rates can affect the value of money and its use in trade and investment. Macroeconomic policies such as taxes, budgets and regulations can also affect the use of money and overall economic activity. The history of money has shown that the use of money has always changed along with social, economic and technological changes. However, basically, money remains an important and valuable medium of exchange in human life, and will continue to develop and change with time and changes in society. Conclusion The history of money covers many forms of trade, from the barter system to the modern monetary systems used around the world today. Commodity money such as gold and silver have played an important role in the history of money, and paper money and electronic money are growing in popularity