In an imaginary place where money did not exist, humans exchange their goods to fulfill each others need. One might be a farmer, another might be a fisherman, and another knows how to weave cotton into clothes. Here we can see cclearly that value stays in the product, demanded by need. Let's now multiply the number of people to 300 with 100 different skills capable of producing 100 different products (goods and services) of different qualities, each with different speed of completion, and different value equivalance. A pair of clothes equals to 20 fishes, or 15 fish with two lobsters, or 50 tomatoes and 20 cabbage, or during hurricane season when fishing is hard, we can get it with 10 scoops of clam. So far money is not needed. But when the quality of the product varies from a person to another, somewhat the rule will be hard to be applied. The people feel they need somehtingelse that could value the products more precisely so that they can exchange it with other products that match the value.
And therefore, money is introduced. The poeple create coins that functions as an exchangeable items with different values stored in it. A big coin, and a half smaller coin, and another quarter coin. the story then continues to ; as the people getting prosperous, and knowledgable to create more innovative products, more and more coins needs to be made. but then people were starting to have trouble keeping their money or carrying them to buy something expensive. which then force the authority to introduce a legal paper that represents certain amount of coins. In order to get these paper, they need exchange it with their coins in a bank operated by the government, People then started buying their needs with the paper, and exchange it with coins to buy less expensive things anytime they like.
Reading the earlier paragraph, although it was not mentioned of what the coins were made of, How many of you actually imagined that the coins are made of gold or silver? and how many of you imagined that the paper money is a wallet-sized paper with big numbers printed on both sides?... I'm sure many of you did. somehow that also came up in my mind, because that's how we were told about the history of money during school. Right? Although some of us might not have the experience being in the age when coins contains real gold, we might have gotten the idea from movies describing the middle ages where gold coins are still in use. or somewhere else. but somehow we know that it was still in use some times ago.
I want you to go back to the first paragraph but then continue to paragraphs below :
And therefore money is introduced. The ruler of the village came up with an idea to solve the problem. He came up with a type of paper that could represent value of certain products. The papers consist of numbers. 1, 5, 10, 20, 50, 100, and 1000. Those are legal papers that are used to value the goods or service produced by the people. It is issued by a trustworthy government agents acting as appraiser under oath whose job is to determine the value of items being sold in the market
For example, a watermelon is valued as 15, thus 10 watermelons are entitled for 10 papers of each 10 and 5. This means that if he could get people presents demanding for all his watermelons, the apraiser will give the seller all the entitled papers for what he had sold. He then will be given a chance to exchange the papers for what he had demanded, such as 2 kilos of oranges valued at 15 and 2 Kg of meat valued at 100, and 10 pieces of carrots valued at 20. He spent 135 points of the 150 points he earned before. he now has only papers worth 15 points left and decided to be kept by the govt agent under a certain account. the watermwlon vendors was also given a chance to give the authority of the mandate through donation or lending. Such act will be revered as kindness, and receive an honour of acknowledgement.
In a larger extent, as age grows, many people wanting more and more improvements in the product quality, new products started to be invented. To match this, the government then produces more paper and distribute it to all the producer and vendors in the market. all addition of value is done by the apraisals of the gov't agent, based on verified addition on production process such as labors, or raw items. As more papers are circulating in the market, more rise in the amount of needs occured. The people also saved more points in the govt banks for future exchange.
This describes pretty much what our money now should be about : a due-exchange paper. Reason being, paper money is merely an instrument to value products, which derived likely from a barter system, which facilitates a non-direct obligatory exchange of products there and then. The paper itself worth none. The truth of wtis would somehow easily felt by those living in a rather small, and closely related community or village because the people's need is simple, and the needs are usually easy to fulfill. They do not value more on the amount of paper hold., because there is no point for them to hold more money, because not much of expensive things available or being produced, and that also would not give them any value as it also did not match to any of their needs.
Ideally speaking, in a paper money society wealth is in the product, as it is the one that contains true value to human. Somehow the people should fairly understand that wealth does not lay in the amount of points hold, but the amount of products produced and demanded, because that is basically why paper money is issued in the first place.
With these understandings I guess we willl easily know that when we abuse our authority to value the invaluables, somehow imbalances will start to occur gradually. Ilegal addition of value to paper money can be defined as addition of demand towards products that did not exist, and somehow, in turn, people will value things that are not initially valued for money, sometimes things that are virtually not exchangeable. Later on, creation of false needs will be rampant, and people will be outrageously demanding for it too. Somehow poeple will also demanding for other things that has never been available for exchange. In a stage where addition is permanent, the demands will turn to addictions. This is when people will start loosing their sanity and judgement.
God Knows Best. Wallahu a'lam.
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