Money and debt – two sides of the same coin

A modern economy is difficult to imagine without money. There have also been civilizations without money, such as the Incas. They certainly appreciated the beauty of gold and silver and used it to make jewelry and cult objects, among other things, but they did not coin coins out of precious metals like people in Europe have done since ancient times. The unit of value in the Inca empire was work, and the economy was based on it.After the conquistadors conquered the New World from Europe, the money economy also prevailed in South America.

Where does the money come from?

money loans

The scholars argue about the origin of the money. Economists explain it with the exchange function of money: According to them, people developed money because it was difficult to agree on exchange relationships for their respective goods. In fact, it should have been difficult to always find someone who, for example, gave you the desired bale of material for 20 chickens. That sounds plausible, but there is no historical evidence that people have actually systematically exchanged goods for goods in the past. “Plainly, not a single example of a barter economy has ever been described, not to mention that money was generated from it; according to all available ethnographic data, there was no such thing,” writes anthropologist Carrie Henry.

Uncertain when people first used money

debt loans

It is only known that the first written certificates are around 4000 years old. Accordingly, the origin of the money is linked to the emergence of an early credit system, the origins of which can be found in temples in Asia Minor. The priests had a central position in society at that time and also administered emergency supplies in the temples. In this context, the money is said to have come from taxes that the farmers had to pay to the temples at the time. According to this reading, debts were first brought into the world, which people then had to pay off with the money they generated.

The fact is: Over time, people have used various things as money, initially goods such as grain, dried fish, opium, tea, mussels or salt. Such money often had its own utility. For example, salt could be used to season or preserve dishes. Later, people used metals, initially as pieces or bars and from the eighth century BC for the first time as minted coins. Gold and silver were also useful because they were suitable for the manufacture of jewelry, for example. For a long time, people did not determine the value relation of gold and silver by supply and demand, but by priests from the orbital period of the sun and moon.

The great advantage of coins is their durability


Metals can also be processed and remelted without losing their substance. However, the maximum amount of money was dependent on the amount of precious metals mined. Throughout history, coinage has become scarce in some regions, causing economic crises. The Chinese invented the solution to such a shortage of money in the 14th century: paper money. In Europe, it only slowly became established with industrialization at the end of the 18th century. At first people were very skeptical and didn’t want to trust a piece of paper. In the 20th century, giral or book money was added, which even exists only as digits on the accounts.Paper money was exchangeable for gold or silver for a long time, and the US dollar was still able to be exchanged for gold at the US central bank until 1971. Today, however, the value of paper and deposit money is based solely on the fact that the money holder trusts that in the future he can buy someone else’s goods or services with his money. In this sense, money is a promissory note for a service that someone else has to provide. If the money supply increases faster than the supply of goods and services, there is inflation, it increases very quickly, hyperinflation. In this case, money is quickly devalued.

Money has been a domain of states for a thousand years; they either make it themselves or create the legal conditions for it. In addition to the respective legal tender – in the euro area, for example, the euro in the form of coins and notes – there are various forms of privately created quasi money. These include bonus miles from an airline, regional currencies such as Chiemgau, time money in Japan or new virtual currencies such as bitcoins. Everything that other people accept as payment can be used as money: “Money is what counts, where it counts and as much as counts.”

Leave a Reply

Your email address will not be published. Required fields are marked *