history of money by cube global partners

1(C) Cube Global Partners

The HISTORY of MONEY From Cattle to Credit Default Swaps

AGENDA

What is MONEY? The Most Significant Innovation of Human Mind

The Need For MONEY: Drawbacks of BARTER SYSTEM

Evolution of MONEY: From Cattle to Credit Cards

Functions of MONEY: How Does It Help the Human Civilization

Financial Markets: The New Lingo of MONEY

Global Financial Crisis: The Meltdown

Conclusion

(C) Cube Global Partners

What is MONEY? The Most Significant innovations of Human Mind

MONEY can be anything which is generally accepted for making PAYMENTS for Goods and Services and Repayment of debts.

So be it wampum, a gold coin, a paper currency note or a digital bank account balance – it involves the common consent of both the individual user and the community.

Therefore at the high level money has a psychological and a social as well as an economic dimension.

The word "money" is believed to originate from a temple of Hera, located on Capitoline, one of Rome's seven hills. In the ancient world Hera was often associated with money.

(The Campania Hera, a Roman copy of a Hellenistic original, from the Louvre )

Goddess HERA of Marriage & Women


AGENDA







Conclusion


The need for MONEY: Drawbacks of BARTER SYSTEM

Barter was the primary medium of exchange before the invention of Modern day Money. But the scope to carry out transactions using the barter system was severely limited since it depended on a coincidence of wants.

There was no common medium of exchange into which both seller and buyer could convert their tradable commodities.

There was no standard which could be applied to measure the relative value of various goods and services.

Initially commodities were chosen as preferred Barter items. They were conveniently stored, had high value densities and easily portable.Moreover they were durable too.

However they had certain major drawbacks too. One could not carry These commodities in his/her pockets. They were no universally accepted standards for measuring the value of these commodities.

So the Barter System failed severely and money kept on evolving in variousforms.

BARTER SYSTEMBARTER SYSTEM


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Conclusion


Evolution of MONEY: From Cattle To Credit Cards

From 9000 – 6000 B.C. Livestock was often used as a unit of exchange. Later, as agriculture developed, people used crops and other commodities for Barter.

1200 B.C. Sea Shells known as Cowries in Africa and Wampum in America were the examples of primitive money.

1000 B.C. At the end of Stone Age, Chinese use of metal gave birth to Metal Coins which were made out of base metal coins and they used to have holes in them so that one could put them together to make a chain out of them.

500 B.C. As the earliest precious metal, Silver coins 1st came into existence in Lydia or Turkey which were further improved upon by Greeks, Persians, Macedonians and Roman empires.

806 A.D. Till 1500 A.D., in China, 1st actual Paper Currency was used as Money. However European Civilization still did not have paper currency for many years.

In Recent Years a contrasting form of money has evolved with virtually no tangible properties whatsoever known as the PLASTIC/ELECTRONIC MONEY. It has become the DEFACTO STANDARD now.

BARTER SYSTEM COINAGE SILVER COINS GOLD COINS PAPER MONEY PLASTIC/ELECTRONIC MONEY BARTER SYSTEM COINAGE SILVER COINS GOLD COINS PAPER MONEY PLASTIC/ELECTRONIC MONEY


AGENDA







Conclusion


Functions of MONEY: How Does It Help The Human Civilization

Specific Functions (mostly micro-economic)

Unit of account (abstract)

Common measure of value (abstract)

Medium of exchange (concrete)

Means of payment (concrete)

Standard for deferred payments (abstract)

Store of value (concrete)

General Functions (mostly macro-economic and abstract)

Liquid asset

Framework of the market allocative system (prices)

A causative factor in the economy

Controller of the economy


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Conclusion



Sometimes human creativity can prove it to be its own nemesis. The current Crisis of Liquidity or the Crisis of Confidence has been triggered by the same human actions. It is now common knowledge that overtly greedy Wall Street types let their creativity run amuck and came up with lots of instruments like Credit Default Swaps (CDS) which no body understood.

Collateral Damages:

Between June 2007 and November 2008, Americans lost more than a quarter of their net worth.

By early November 2008, a broad U.S. stock index, the S&P 500, was down 45 percent from its 2007 high.

The crisis began in February 2007, when HSBC, the world's largest (2008) bank, wrote down its

holdings of subprime-related MBS by $10.5 billion, the first major subprime related loss to be reported.

During 2007, at least 100 mortgage companies either shut down, suspended operations or were sold.

Top management has not escaped unscathed, as the CEOs of Merrill Lynch and Citigroup resigned within a week of each other

in late 2007.

As of August 2008, financial firms around the globe have written down their holdings of subprime related securities by US$501 bn.

When Lehman Brothers and other important financial institutions failed in September 2008, the crisis hit a key point.


AGENDA







Conclusion: The Road Ahead


Conclusion: The Road Ahead

As the global joy ride of MONEY seems to have crash landed, the investors’ CONFIDENCE in any system seems to have become a mass casualty. Today the consumers don’t trust banks…..the banks don’t trust creditors…..and even banks don’t trust banks blindly anymore.

So while the road to recovery will be long and steep, the journey arduous and taxing to say the least, the small simple step is for the financial institution and governments to come together to instill confidence in the retain customer…..and enough that he is willing to trust them again with his life’s savings! This is not going to be an easy task.

The road ahead does look bumpy and the ride has become more trouble some as the Financial crisis has brought down some of the most influential Global Financial Institutions.

The ground under our feet is shaking and more stricter norms and policies must be put in action to stabilize this global crisis and Just hope for a better future.


Conceptualized by,

Cube Global Partners Entry India Services | VC Advisory | Strategic Business Consulting

[email protected] | www.cubegp.com


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