Economic Wisdom to Apply in Your Twenties

Chapter 16

Chapter 2 Section 4 Behind the "one dollar" is economic history
In some islands in the Pacific Ocean and some African nations, taxes are paid in a currency called "Gamali", a shell, and 600 "Gamari" can be exchanged for a whole bouquet of cotton.

In the Melanesian Islands, because residents generally keep dogs, dog teeth are used as currency. One dog tooth can buy about 100 coconuts, and to marry a bride, you must give her hundreds of dog teeth as gift money!Someone once shipped a large amount of dog teeth to Melanesia to defraud the aborigines of various useful materials, which once caused "inflation".

What is even more novel is the stone currency of the residents of Yap Island in the Caroline Islands in the Pacific Ocean.Each currency there is called "one cent", and each cent is a huge round stone with a round hole in the center.According to the regulations of the local people, the larger the volume and diameter of the "fen", the higher the value.Therefore, some valuable "points" have a diameter as large as 5 meters.

The huge stone currency is not afraid of theft, fire and water, and is durable, but it is not easy to carry and carry.Due to the difficulty of transportation, people had to stamp the stone currency they got from selling the goods and let it stay in place as their own "real estate".

shellfish
Why are there so many weird currencies in the world?Can these "nonsensical" currencies really be called "currency"?

According to the interpretation of economics, any commodity that can perform functions such as a medium of exchange, a measure of value, a deferred payment standard, or a fully liquid storehold of wealth can be regarded as money.

The predecessor of currency is the gradual evolution of ordinary commodities into general equivalents in the process of exchange.In primitive society, people used barter to exchange the materials they needed, such as a sheep for a stone axe.Sometimes limited by the types of materials used for exchange, it is necessary to find an item that can be accepted by both parties in exchange.For example, one sheep is exchanged for two stone axes, and one stone ax is exchanged for three taels of salt. At this time, the stone ax has the function of currency.

In the early history of mankind, because it was not easy to obtain, Bei served as a general equivalent, so "Bei" became one of the most primitive currencies.Today's Chinese characters such as "earning", "losing" and "wealth" are all next to the word "bei", which is the imprint of the circulation of shells as currency in the past.

After years of natural obsolescence, the objects used as money were gradually replaced by metals in most societies.The use of metal as currency is due to the fact that its manufacture requires manpower, it cannot be obtained in large quantities from nature, and it is also easy to store.Rare amounts of gold, silver, and difficult-to-smelt copper gradually became the main monetary metals. These metals were cast into coins of uniform weight and fineness. When using currency, there was no need to measure the weight or test the fineness.At the same time, these coins often bear the face of the king or emperor, and intricate designs of coats of arms and seals to prevent counterfeiting.

With the further development of the economy, metal currency exposed the inconvenience of use.The weight and bulk of metal coins required for large transactions can be annoying.In addition, the wear and tear that occurs in the use of metal money undoubtedly reduces its value.According to incomplete statistics, since humans used gold as currency, more than [-] tons of gold have been worn out in mints or in people's hands, money bags, and clothing pockets.

As a result, paper money, a symbol of metal currency, came into being.The earliest banknotes in the world appeared in Jiaozi in the Sichuan area of ​​China during the Song Dynasty.

With the development of world economy and trade, more and more banknotes have appeared in the world, circulating in 193 independent countries and other regions in the world.As the main currency of each country's currency, banknotes reflect the cross-section of the country's history and culture exquisitely and multi-facetedly, and communicate the economic exchanges of people from all over the world.At present, the most widely circulated banknotes in the world are US dollar, Euro, Renminbi, Japanese yen and British pound.

With the development of globalization, global transactions are frequent.Hundreds of banknotes in the world have intersected, so there is an exchange rate.

The exchange rate is the rate at which one country's currency is exchanged for another country's currency, and is the price at which one currency expresses another currency.Exchange rate fluctuations will bring large-scale fluctuations in import and export trade, so many countries and regions have implemented relatively stable currency exchange rate policies.The rapid and steady growth of import and export in Mainland China is largely due to the stable RMB exchange rate policy.

Now, more and more young people intend to go abroad, understanding the exchange rate can better guide our budget for going abroad and reduce our cost of studying abroad.For people living in China, exchange rate fluctuations are not completely unaffected.Wild exchange rate fluctuations can have disastrous consequences.Dramatic exchange rate changes may cause an irresistible financial earthquake, causing an industry to collapse immediately, and a country may not be able to recover for more than ten years.For example, when Japan and Southeast Asia encountered a financial crisis in the 20s, the wealth accumulated by many people over the years was wiped out overnight.

Currency is our most direct purchasing power. Therefore, only by understanding currency can we truly understand how to manage every penny!

Wisdom Pieces: The Currency War According to the Experts
As long as I can control a country's currency issuance, I don't care who makes the laws.

— Mayer Rothschild

I firmly believe that banking institutions are a greater threat to our liberty than enemy armies.

--Thomas Jefferson
Money has no country, and financiers do not know what is patriotic and noble, and their only purpose is to obtain.

——Napoleon
In the absence of a gold standard, there would be no way to protect (people's) savings from being eaten up by inflation, and there would be no safe haven for wealth.

— Greenspan

(End of this chapter)