Have you ever wondered what money is and why we value it? The philosophy of money has a complicated background. Early humans relied on bartering, and modern coinage didn’t appear until about 500 B.C. Bartering still held out, and is still sometimes used today. But perhaps what’s most surprising is that the gold standard didn’t appear until 1816 A.D., and it was quickly replaced by the FIAT system in 1971.
Throughout history, humans have valued gold intrinsically. You might be wondering why gold and not copper or silver. Gold is non-toxic, doesn’t tarnish, and it’s a beautiful color and luster. Gold is just scarce enough to be valuable and just solid enough that it’s not too difficult to extract from the Earth. There is $8.14 Trillion worth of gold above ground in the world today.
But even the worth of gold is subjective. That is to say, if we all decided tomorrow that gold is worthless, something else would take its place. The same concept applies to the FIAT system- the strength of a country’s currency is based on the perception of that country’s economic strength. When a country is no longer perceived as being economically viable, their currency becomes devalued. It’s all about supply and demand.
Check out the infographic below to learn more about the history of money and why we value it.
