How Did We Get Where We Are Today?
To understand how you came to be where you are today, you must look back your life and the choices you have made along the way. In the same way. in order for us to understand the how and why of the fundamental changes that are taking place in the world’s economic system, we must retrace the steps that that have brought us to this point. When we do this, we see that deliberate steps have been and are now being taken toward a completely cashless economic system and a method of inventory management that will be used to control the distribution of all goods and services.
If we look back at the steps that have been taken in the development of the world's present monetary system, we can see how we have come very suddenly to the place where we will soon have a new monetary system that will be used to control every individual’s buying and selling. We can also see that by controlling the individual’s ability to buy and sell, that the world's economy and, therefore, the world itself can be controlled by a single entity.
First we will consider how certain steps have been taken toward a cashless monetary system. We will also see why this transition to a new system of commerce is being readily accepted by almost every segments of our economy including most people. Finally, we will look at why this system is being implemented, and the awful consequences that will follow. Our present system of commerce has been developed over the centuries to meet the needs of individuals who need to buy and sell goods and services.
There have been many changes in the way people have done business through the years, but these changes have usually come very slowly. In recent years though, you and I have witnessed many changes in our system of commerce that have taken place in a very short period of time. Let’s consider some of the changes that have taken place in the past so that we might understand what is happening now and what will happen in the future.
Solutions Needed: Buying and selling was originally a system of bartering in which goods and services were exchanged between individuals. This system proved to be very inconvenient in that it was far too cumbersome to be an efficient way to conduct trade. For instance, if large quantities of an item were to be traded or if the item to be traded was heavy or bulky, transportation was a problem.
A system of bartering is also a hindrance to those who produce goods that are perishable. It is necessary to quickly exchange perishable items for non--perishable goods, or convert them to a form of wealth that is storable. A farmer, for instance, had to quickly exchange his perishable fruit or vegetables for non-perishable items which he could use or trade at a later time. These and other limitations of the barter system led to the idea of using certain desirable items as a primitive form of money.
This new method of trade involved using certain items, which were not perishable and which had some intrinsic value, as a medium of exchange. Primitive forms of money included sea shells, precious and semi-precious stones, bits of metal, or almost any other non--perishable item that would be desired by others. The transition to a system of money, as primitive as it was, made trade much easier.
Since the items which people began to use for money were usually smaller than the items produced by their labor, a person’s wealth could now be converted to a form more portable than the items they had produced. Since the items used as money were not perishable, a person's wealth could be more easily stored and transported. Converting perishable products to a storable form of money also enabled people to continue trading during times of the year when the perishable items they produced were out of season. This allowed for year-round trading, a greater range of trade, and a wider variety of products that could be purchased.
While the use of these primitive forms of money was a great improvement over the barter system, there was still room for improvement.
The Need for Standards: One of the problems with these primitive forms of money was that there were no standards to determine the actual worth of the various kinds of money that were being used. For example, metals that were used as money might vary greatly in weight or purity, therefore their exact worth might not be known. The same problem arose if the item being used as money was a precious or semi-precious stone. Since there are differences in the quality and weight of similar stones, the value of each stone is different. The problem of determining the worth of an item used as money becomes even more difficult when the item has value because of its beauty or desirability, apart from any practical use. This is a problem when items like sea shells, or art work, for example, are used as money. The perceived value of these kinds of items varies from person to person, depending on the opinion of whoever is receiving these kinds of items as payment.
To establish a more constant value of money, and therefore a more stable rate of exchange, it was necessary to standardize the form of money so that it would have a recognizable and relatively constant value. By standardizing money, its value is sufficiently assured so it will have the confidence of both the buyer and seller.
Metals as Money: Metals were an obvious choice as a material that could be used as money. Metals are not only non-perishable but very durable. Since certain metals can be quite valuable, coins made from metals can be relatively small and easily stored. Coins are also more portable than most other items that had previously been used as money.
The physical properties of metals make the standardization of the value of coins a relatively easy task. Metals can be precisely weighed and measured for purity, assuring a consistent and recognizable value. Since metals also have many other uses apart from their use as money, they have intrinsic value, which also lends a measure of stability to a monetary system that is based on metal coinage.
Governments Step In: It wasn’t long until governments saw the benefits of becoming the sole producers of coins. Two of the advantages of governments controlling the production of coins were that they could guarantee the purity of the metals used in coins and the weight of the coins. Governments recognized that the standardization of weight and purity is necessary in order to stabilize the value of the coins that are produced. This in turn stabilizes the economy and promotes trade.
Another advantage of a government monopoly of the production of coins was that governments would be better able to better control the money supply, an important tool that can be used to help stabilize the economy. By controlling the number of coins in circulation governments could ensure, to some degree, that the supply of money in relation to the amount of goods and services being offered in the marketplace was relatively constant. This would tend to prevent fluctuations in prices.
Metals are such an excellent choice to be used as money that, for most of man's history, coins made of precious metals have been the primary medium of exchange. However, as there are many advantages to using metals as money, some believe that there are many disadvantages as well.
One disadvantage of using metal coins as currency is the expense of producing the coins and, afterward, maintaining the supply of coins in circulation. The greatest expense in the production of coins made from silver or gold is the metal. Added to this are the considerable expenses of equipment and labor required to manufacture the coins.
Another undesirable aspect of using coins made of precious metals is that the number of coins that can be placed in circulation is limited by the finite supply of metals available to the government. This limits the growth of the economy.
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