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PowerPoint: My Money and Its Development


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My Money and Its Development
by S. Kolber and A. Ballas

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PowerPoint: My Money and Its Development

  1. 1. My Moneyand its development
  2. 2. What is Money? What is Currency?Both ‘Money’ and ‘Currency’ involve theexchange of goods and services.Money is the most liquid asset because it isuniversally recognized and accepted as thecommon Currency.MoneyThe economic definition emphasizes that moneyis the medium of exchange, or what we use tobuy things with i.e., what you earn by workingand what you spend in order to buy things.CurrencyCurrency is the means of purchasing throughtrade and generally refers to printed or mintedmoney. Currency is the system or type of moneythat a particular country uses.Local currency: The local currency is Australiandollars.
  3. 3. Money is a ‘Unit of Account’‘Unit of Account’ means:That money can be used to set the value of items.
  4. 4. Money is a ‘Store of Value’‘Store of Value’ means:That ‘money’ is able to be saved, put away andretrieved. But with one stipulation, that after it hasbeen retrieved it must still be able to be used.
  5. 5. Money is a ‘Medium of Exchange’‘Medium of Exchange’ means:Money must be able to be swapped and retain itsvalue. So that there is no need for any actual goodsto be exchanged.
  6. 6. One Man EconomyOne Man Economy• No need for money.• No need for exchange.
  7. 7. Barter: The Bartering SystemWhat is Bartering?Trading goods and services without the use ofmoney is called bartering. Early civilizations reliedon this kind of exchange. If you were a successfulhunter you would have a lot (a surplus) of animalmeat and animal products. If you meet someonewho has a lot of vegetables because they are a goodfarmer then you have the makings of a deliciousmeal. So you swap/trade/exchange some of yourgoods for theirs.Even cultures in modern society rely on it. You mightswap ‘football cards’; a play-station game foranother.It is a system of trading items that are ‘needed’ or‘wanted’.
  8. 8. Barter: What problems could arise?What problems could arise?Analysis of this Economic System reveals threeaspects that are considered as problems?Can you guess what they are?
  9. 9. Barter: Problem 1: Standard of Value‘Standard of Value’?Who decides what something is worth?What happens when you want something small, likesome tomatoes and the tomato vendor asks you fora table in return?Youd probably argue that a table is worth a lotmore than a few tomatoes.Is a cow a fair exchange for a lamb?Is a 14ct gold necklace a fair exchange for a dozenhome-baked pies?Under a barter system there was no measure ofvalue. Because of this, you might be pressured intotaking unfair deals and therefore suffering in theprocess.
  10. 10. Barter: Problem 2: Double Coincidence of WantsDouble Coincidence of Wants?Exchange can take place between two persons onlyif each possesses the goods which the other wants.Double Coincidence of Wants is the requirements ofa barter exchange that each trader has what theother wants and wants what the other has. Becauseeveryone doesnt necessarily want everything, thelack of Double Coincidence of Wants is a majorobstacle in barter exchanges, especially for complex,modern economies. While Double Coincidence ofWants is also essential for exchanges involvingmoney, its such an inherent trait of money we dontthink twice about it. By its very nature as a generallyaccepted medium of exchange, everyone WANTSmoney.
  11. 11. Barter: Problem 3: Indivisibility of CommoditiesIndivisibility of Commodities?It was difficult to divide a commodity without loss inits value.e.g., a man who wants to purchase 10 metres ofcloth equal to the value of half his calf would find itdifficult to ‘divide’ his calf unless he was able to findother commodities for the other half of his calf andtherefore be stuck with half a calf. (“,)The likelihood would be that he would not be ableto purchase the 10 metres
  12. 12. Commodity Money & Fiat MoneyCommodity Money is:Commodity Money is a form of money which has anintrinsic value, meaning it is worth something in itsown right rather than simply being a token offinancial value such as a banknote.The best known form of commodity money is goldor silver coins, though any commodity can fulfill thisrole. Fiat Money is: Most types of cash used today do not have any real intrinsic value. For example, a banknote is virtually worthless in itself and only has value because society accepts it as a measure of currency and a unit of exchange. This type of currency is known as Fiat Money.
  13. 13. Coinage 610 BC Lydians of Asia Minor invent coinage; shortly afterward it spreads to Greek cities in Asia Minor, then Greek islands, then Greek mainland, then rest of world 600 BCArchaic Age China issues its first coins, cast bronze pieces in shape of farm tools800-500 BC 560 BC Lydians invent bimetallic coinage, issuing coins of pure gold and pure silver 550 BC First coinage minted in mainland Greece, in Athens and Corinth Obsidian, a type of volcanic glass or hardened lava, is one of many materials that were used as money before coins and afterward. Lion paw electrum 48th stater Lydian electrum trite (4.71g, 13x10x4 mm). (0.27g). This coin features on This coin type, made of a gold and silver alloy, the obverse a lions paw. Theres was in all likelihood the worlds first, minted by disagreement over whether King Alyattes in Sardis, Lydia, Asia Minor these fractions are Lydian. (present-day Turkey), c. 610-600 BC.
  14. 14. Paper CurrencyFirst Paper MoneyThe first paper money was issued in China duringthe Song dynasty in the 10th century.The name of the note was jiaozi. For the first time itwas issued liberally among the people of China.Thus it was able to take the place of coins that tillthen were widely used in circulation.Paper money appeared in China due to severalreasons. Firstly, after a great development of theeconomy and a boom in trade registered in theNorthern Song Dynasty, the iron coin sometimesshowed its disadvantages, mainly due to the factthat it was small in value and heavy. Inaddition, during this period, printing showed greatresults, it was able to produce paper money, whichwas quite convenient for traders.
  15. 15. Fort KnoxThe US Bullion Depository, Kentucky Other items:Fort Knox In the past, the Depository has stored theAmount of present gold holdings: Declaration of Independence, the U.S.147.3 million ounces at a book value of $42.22 Constitution, the Articles of Confederation,per ounce. Lincolns Gettysburg address, three volumes of the Gutenberg Bible, and Lincolns secondOpening: inaugural address.The Depository opened in 1937; the first gold wasmoved to the depository in January that year. In addition to gold bullion, the Mint has stored valuable items for other government agencies.Highest gold holdings this century:649.6 million ounces (December 31, 1941). The Magna Carta was once stored there. The crown, sword, scepter, orb, and cape of St.Construction of the depository: Stephen, King of Hungary also were stored at theBuilding materials used included 16,000 cubic Depository, before being returned to thefeet of granite, 4,200 cubic yards of concrete, 750 government of Hungary in 1978.tons of reinforcing steel, and 670 tons ofstructural steel. The cost of construction was The Depository is a classified facility.$560,000 and the building was completed in No visitors are permitted, and no exceptions areDecember 1936. made.
  16. 16. Credit MoneyCredit MoneyCredit money refers to money that constitutesfuture claims of a valuable item against an entity.The holder of credit money can use it to purchasegoods and services; when the holder wants to, he orshe can redeem it to get the item by which it isbacked.Credit money is made of a material that has lowintrinsic value compared to the value it representswhen exchanged.Some types of credit money include IOUs, bondsand money market accounts. Some people alsoconsider paper money and coins to be credit moneybecause they have no intrinsic value and can beexchanged for valuable commodity.
  17. 17. Money is a means of keeping scoreMoney ScorecardThis all means that today, money is just a number; just a score at the end of a sportsgame.The Forbe’s World’s Richest List is just similar to The Best Sportman’s Award given out byother magazines.
  18. 18. Assembled by: S. Kolber Layout: A. Ballas