To better understand today’s topic, let’s have a look at evolution of trade and currency. In the beginning, man was an animal. When he was hungry, he would hunt food and eat. When felt an urge, he would grab a woman and have sex. Then, he realized that this totally need based behavior was not good enough, and even dangerous.
This was because, time and conditions would not be always same. For example, the weather would be too bad to seek and hunt the food and / or women. So, came the idea of possession and hoarding. This lead to a few important developments. Man started to store and hoard food.
This way, he also realized that food may go bad really quick and all the effort was in vain. So, he invented some primitive, food storage technologies like, burying food in ground, salting it, cooking it, storing in a relatively cold place and / or drying it. As far as the women were concerned, this gave rise to the idea of possession, called belonging, relationships or marriage in modern societies. He came to the conclusion that in order to have sex, whenever he needed and wanted, he must own women and keep them with him all the time. This was not just men.
Archaeological evidence shows that some powerful women, who were good hunters, too, did that to men, as well. Men also realized that more is good and provides, more security, specially, in unfavorable conditions. So, he started possessing, as many women, he could, who would not only help him in hunting and cultivating food, and having lots of sex, but, also provide lots of kids for future security, as kids were also considered a possession or property. This also gave rise to men possessing weaker men or slavery. Owners would use these men to work and hunt for them and may even have homosexual sex with them. As the civilization and the needs grew, man realized, it didn’t matter, how much and how many he owned, he could not produce everything he needed or wanted, all by himself, sometimes, just because he didn’t have anyone who could do that particular job.
So, people started exchanging stuff, for needs, demands and wants, and barter trade started. This was not enough, either. People realized, sometimes you really wanted or needed something, but, the person who could provide that did not like or want anything that you would offer in exchange. They came to the conclusion that everyone should have something which everyone would always want for his products or services. So came gold, silver and other precious metals and, later, the coins made with those.
If you had those, you could always buy anything you needed or wanted. Those kind of dealings between people and their ownership of men, women and other property, obviously gave rise to disputes. In the beginning usually the most powerful would win. After this, usually the weaker parties, started to go to someone who was considered as more powerful then the disputing parties, to settle the dispute for them.
This was the beginning of government and justice system. This gave the powerful people another idea. They started demanding men, women, animals, property or coins in return for dispute settlement. This was the beginning of taxation. Soon, the dispute settlers or government, realized that the disputing parties may not like their way of thinking or the way they settled the dispute. So, they teamed up with a new kind of people.
These people came forward and told others that they were sent by the creator of this world and he had given them a set of commandments or a book. The government would, from now on make settlements on the basses of those commandments from God. Everyone must follow and agree. Otherwise you would have God’s curse and you will be burned in hell, forever. This was the beginning of religion, also called ideologies or political parties and groups, in modern times.
Soon, the leaders realized that they could not be everywhere, all the time. It would bring in lot more tax, if more people were doing it. So, they started using slaves, hires or contractors to settle disputes on their behalf. Hence, governments started growing and this was the beginning of bureaucracy. Another problem that surfaced was that the coins were not standardized and everyone would use different standards, leading to disputes, fights and even wars. So, governments decided that from now on only government would issue coins, in accordance with certain standards, and everyone would use only those coins for all purchasing and transactions, so that the disputes could be settled, based on those standards, and fairness in transactions could be maintained.
After that, as governments grew, families were converted into tribes and clans. Villages and cities came into being. They were joined and organized into provinces and states. Provinces and states gave rise to countries and nations. Came with it the trade between countries. Technologies were still in very primitive stages. Governments realized that it was becoming impossible to keep up with the demand for coins. So, it was decided the from now on governments would issue bills and would keep up an equivalent amount to gold in reserve to provide value to money bills and to cash out the bills if anyone wanted to do so. So, paper money started. This was also the beginning of banks and central banks that would issue the paper money and hand off the gold when someone cashed out the bills. Bills were easier and safer to store, carry and use. So, cash outs were not common. Unless there were run-offs.
Then, as economies and trade grew, governments realized that the demand for money bills was growing far ahead of any amount of gold they could ever own. So, governments started adopting requirements for reserving smaller and smaller proportions of gold, as compared to the value of paper bills issued. Ladies and gentlemen, this was the beginning of major devaluation of money, inflation, crises, recessions, depressions and run-offs.
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