What is "money"?

First of all Interestingly enough, money often has no intrinsic value. Instead, money is an object that has a value placed on it. Some money (such as gold and silver) has a monetary value, but the most common type of money used today—"paper money"—has no monetary value. Instead, it is an illusion of value.

Money is merely an idea, an illusion whose value is non-existent.

It is only determined by the importance we place on it.

Before we created money, we were forced to trade goods and services daily in what we refer to as the "Barter System. Since there was no arbitrary value placed on these items, every single trade was determined by what each person or party was willing to give up for something they wanted.

That’s where the problems started—since there was no default value for each. For example, if I wanted a horse but I only had a farm, I would have to decide to give you the farm in trade for the horse. And immediately you can already see one of the major problems with the barter system.

Because there was no standardized medium of exchange, it was very difficult to get people who needed things from each other to come to an agreement.

Commodity money

People from the barter system are used to buying goods and services like weapons, animal skins, and salt. But then, since everyone knew that everyone wanted these things, they started buying them even if they didn’t need them at the time, so they could use them as a trade later.

That’s where humanity found the "Foundation of Money". You see, people bought things even if they didn’t need them( why? ), as a place holder so that they could exchange or trade them for goods they would need later.

Rather than exchanging goods and services for goods and services that you may not require at the time, you can exchange your goods and services for arbitrarily chosen objects to act as a placeholder of value, an IOU.

That’s where the ideas of the entire world slowly moved away from the barter system to the money trading system.

But there is still a problem. You see, for money to be worth anything, it needs to be scarce. "The more available something is, the lesser its implied value."

As a result, around the year 770 BC, the first metal coins were created in China. This was it. Money was finally worth something. At this time, money wasn’t yet an illusion. "The value of the coin" was determined by the value of the metal the coin was made out of.

However, kings and rulers discovered the power of money. The more tiny presious you have, the more power you can control.

Alyattes, the king of Lydia, created the first official money mint by stamping an image of the coin with its denominations. Now there is where the money illusion takes form. Now people can easily tell the value of metal just by looking at the picture on its face.

but to create more money by the time the precious metals were too expensive. To produce more money, they started slimming down the coins, then mixed the expensive metals with cheaper metals. Soon, all coins in circulation were worth less than the images on their faces indicated. And so the illusion of money was born.

Now the value of the coin is no longer determined by the value it is made of. The value of the coin is simply what the ruler and bank said it was.

"Fiat" is the fancy word we use to describe this modern-day illusion. It’s a Latin word that translates to "let it be done."

The illusion of money is one that we never really think about.

However, there is one problem with printing money: inflation.

The thing about money is that, primarily, it needs to be a means of exchange to be considered valuable.

"So the amount of money in circulation needs to reflect the output of the goods and services that are being provided."

But can you trust them all? Can you "really" trust the value of money, even though it’s come out of nowhere as it's come out of nowhere as thin as air? Even though it’s just a paper? The people who print money and rules know the simple rules of money and its powers. The more you have, the more power you earn.

Money may be something we all strive for, but it may also be just the biggest illusion humans have ever created.

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