Chapter Ten<br />Into to Money<br />
Before there was money, there was barter.<br />
p. 243<br />Barter – the direct exchange of one set of goods or services for another --  used before there was money<br />
Barter economy today<br />
Children swap cards<br />What was your favorite Pokémon card?<br />
Parents make deals – watch your little sister tonight and you can stay out later tomorrow night<br />Saudi and British Aer...
In order to evade taxes, businesses will barter. <br /> A dentist needs her car fixed and a car mechanic needs a root cana...
p. 243<br />Money<br /> anything that serves as a medium of exchange, a unit of account, and a store of value.<br />Early ...
WAMPUM<br />Beaded shells, called wampum, were the most common form of money in North America. <br />
By 1637, the Massachusetts Bay Colony declared wampum legal tender (ok to use as money). <br />
CONTINENTALS <br />These were America's<br /> original ‘bucks‘ (deer hide once used as money).<br />
To finance the American Revolution, Congress authorized the first printing of currency by the new republic. <br />But with...
WILDCATS<br />In the so-called Free Banking Era, America was flooded with various currency notes - many of which were rede...
BROKEN NOTES <br />“Broken" notes refers to the frequency in which the banks that issued them went bust. <br />Without the...
GREENBACKS<br />
Pressed to finance the Civil War, the U.S. government resumed printing paper currency for the first time since it issued C...
 In addition to its new color, "greenbacks" incorporated a more complex design, including a Treasury Seal, fine-line engra...
p. 247<br />Representative Money (Fiduciary) – objects that have value because the holder can exchange them for something ...
How paper cheques came to be:<br />Gold too heavy to carry. <br />Goldsmiths issued receipts.<br />People traded the recei...
Take this one step further – why even have money backed by anything?<br />*Fiat Money – money that has value because the g...
1933, FDR signed the executive order that changed the dollar from being representative money to inconvertible fiat.<br />
It is not enough that the government says this is legal tender<br /> --  Confederacy said that their money was legal tende...
Money has to be limited to have value<br />That was what the gold standard did – amount of money limited by the amount of ...
Gold Standard<br />Ft. Knox gold vault<br />
Gold Standard 1873 - 1933<br />Checks inflation, but economy cannot grow past amount of gold.<br />Adam Smith said it is n...
FEDERAL RESERVE NOTES <br />Open up your wallet - if you're carrying some cash on you, chances are its a Federal Reserve N...
Over the years, these notes have changed very little –<br />they have been reduced in size in 1929 <br />and the words "In...
Money is backed by faith and anything that erodes that faith is destructive to money. <br />Counterfeiting and overprintin...
Keep Up with what’s Happening<br />http://money.cnn.com/<br />http://www.smartmoney.com/<br />http://www.frbatlanta.org/pu...
End<br />
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Into to money

  1. 1. Chapter Ten<br />Into to Money<br />
  2. 2. Before there was money, there was barter.<br />
  3. 3. p. 243<br />Barter – the direct exchange of one set of goods or services for another -- used before there was money<br />
  4. 4. Barter economy today<br />
  5. 5. Children swap cards<br />What was your favorite Pokémon card?<br />
  6. 6. Parents make deals – watch your little sister tonight and you can stay out later tomorrow night<br />Saudi and British Aerospace swap fighter planes for oil<br />
  7. 7. In order to evade taxes, businesses will barter. <br /> A dentist needs her car fixed and a car mechanic needs a root canal. <br />Illegal if not reported for income tax purposes.<br />
  8. 8. p. 243<br />Money<br /> anything that serves as a medium of exchange, a unit of account, and a store of value.<br />Early money<br />
  9. 9. WAMPUM<br />Beaded shells, called wampum, were the most common form of money in North America. <br />
  10. 10. By 1637, the Massachusetts Bay Colony declared wampum legal tender (ok to use as money). <br />
  11. 11. CONTINENTALS <br />These were America's<br /> original ‘bucks‘ (deer hide once used as money).<br />
  12. 12. To finance the American Revolution, Congress authorized the first printing of currency by the new republic. <br />But without the strong financial backing of gold or silver, the Continentals quickly devalued and were soon worthless - thus the expression, "not worth a continental." <br />
  13. 13. WILDCATS<br />In the so-called Free Banking Era, America was flooded with various currency notes - many of which were redeemable in gold or silver, but some were worthless. <br />Some banks would set up shop in remote mountainous regions, prompting people to comment that it was easier for a wildcat to redeem these notes than people - thus the name. <br />
  14. 14. BROKEN NOTES <br />“Broken" notes refers to the frequency in which the banks that issued them went bust. <br />Without the confidence that these notes could be redeemed, they were virtually worthless. <br />
  15. 15. GREENBACKS<br />
  16. 16. Pressed to finance the Civil War, the U.S. government resumed printing paper currency for the first time since it issued Continentals. <br />The name itself, a reference to its color, has become as much a part of Americana as apple pie. <br />
  17. 17. In addition to its new color, "greenbacks" incorporated a more complex design, including a Treasury Seal, fine-line engraving and various security measures. <br />
  18. 18. p. 247<br />Representative Money (Fiduciary) – objects that have value because the holder can exchange them for something else of value<br />IOU’s, checks and bank notes<br /> -- because both are some kind<br />of token which are used as <br />money and carries the same<br /> value<br />
  19. 19. How paper cheques came to be:<br />Gold too heavy to carry. <br />Goldsmiths issued receipts.<br />People traded the receipts. <br />Could redeem in gold.<br />Idea stuck.<br />
  20. 20. Take this one step further – why even have money backed by anything?<br />*Fiat Money – money that has value because the government has ordered that it is an acceptable means to pay debts<br />
  21. 21. 1933, FDR signed the executive order that changed the dollar from being representative money to inconvertible fiat.<br />
  22. 22. It is not enough that the government says this is legal tender<br /> -- Confederacy said that their money was legal tender, but no one would take it -- not even die-hard Southerners<br />
  23. 23. Money has to be limited to have value<br />That was what the gold standard did – amount of money limited by the amount of gold<br />
  24. 24. Gold Standard<br />Ft. Knox gold vault<br />
  25. 25. Gold Standard 1873 - 1933<br />Checks inflation, but economy cannot grow past amount of gold.<br />Adam Smith said it is not how much gold, but the sum of all the goods and services an economy produces<br />
  26. 26. FEDERAL RESERVE NOTES <br />Open up your wallet - if you're carrying some cash on you, chances are its a Federal Reserve Note.<br />Following the Federal Reserve Act of 1913, these notes became the dominant form of paper currency in America<br />
  27. 27. Over the years, these notes have changed very little –<br />they have been reduced in size in 1929 <br />and the words "In God We Trust" were added in 1955. <br />
  28. 28.
  29. 29. Money is backed by faith and anything that erodes that faith is destructive to money. <br />Counterfeiting and overprinting.<br />German Weimar Republic example<br />
  30. 30. Keep Up with what’s Happening<br />http://money.cnn.com/<br />http://www.smartmoney.com/<br />http://www.frbatlanta.org/pubs/dollarscents/dollars_and_cents-currency_features.cfm?redirected=true<br />
  31. 31. End<br />

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