The World of Money

What is “money”?Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or economy.

Money originated as commodity money (money made from something valuable such as gold or silver), but nearly all modern money systems are based on fiat money. Fiat money is money that has value because everyone agrees that it does. The term derives from the Latin fiat, meaning "let it be done" or "it shall be [money]", as such money is established by government decree.

Opening Discussion

• Do you care about money itself, or do you just like spending it?

• Do you often use paper money, or do you prefer to use credit cards and bank cards?

• What do you think the world would be like if there was no money?

BarteringBefore the invention of money, people traded things they had for things they needed. This was called bartering.

•Do you think this is a good way to get the things you need?

•If you had to trade things you made for food and clothing, would you have the same job you have now? How would your life be different?

•Look at the men in the picture. What are their jobs? What can they do for each other?

Coins and Banknotes

The earliest type of money still in use is the coin. Coins are small metal disks, originally made of valuable metals.

A banknote (often known as a bill) is a kind of money made of paper. Usually coins are used for lower valued monetary units, while banknotes are used for higher values.

When money is made of physical things we can carry around and trade, like coins and bills, this kind of money is called cash.

Cashless SocietyThe government of Sweden recently announced that they will soon stop making paper money and coins. In the future, people in Sweden will have to use credit cards and debit cards to pay for everything. People in Europe can also use text messages from their mobile phones to make transactions.

•If there is no cash, will people still be able to steal from each other? What other crimes might be more difficult?

•Do you think your country should get rid of cash?

Gift EconomyA gift economy (or gift culture) is a society where valuable goods and services are given without any agreement for immediate or future rewards (i.e. something for nothing).

Long ago, many societies had a gift economy instead of one based on bartering or money. For example, many Native Americans who lived in the Pacific Northwest, practiced the “potlatch” ritual, where leaders give away large amounts of goods to their followers, strengthening group relations. By sacrificing his wealth, a leader gained a position of honor.

Reputation EconomyScience and technology are changing the world every day. Some people think that in the future machines will be able to make everything we need for free, or almost free. What will people do if they don’t have to work to have food and clothing and shelter? There is a danger that if everything is given to us, we might all become very lazy.

A recent idea on how to solve this problem is by creating a public reputation system. For example imagine a world where every time someone did something good for you or made you happy in some way, you could give them points for their reputation score. If everyone could see everyone else’s score people with high scores would be “richer” than other people because everyone would know they are generous and kind.

What do you think?

• Could you imagine living in a gift economy? Do you think giving things away would be a better way of life than buying and selling?

• Would you want to live in a world with a reputation system? What would be good about it and what would be bad?

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