Why did we invent Money?

The word money comes from the Latin word moneta which means coin. 

Money is stored labour, which can be passed on to the next generation.

The invention of money came with the possibility that we can store our labor in coins, paper, electronic machines that can be used whenever we want, So we can store labor and use it in the future whenever we need it, this wasn’t possible when we traded by exchanging thing.

Universal Trust Symbol

Before money was invented, people traded by exchanging things.
For example, a farmer wanted a shoe so he’ll go to a shoemaker and exchange wheat for a shoe, but who decides how much wheat is equal to a pair of shoes, they have to keep in mind the supply and demand of wheat and shoes in their locality to come at a fair exchange. The complexity doesn’t end there, what if the shoemaker doesn’t need wheat, he needed wine. so to have an exchange, the farmer had to trade wheat with the winemaker first, then exchange the wine with a pair of shoes from the shoemaker.

Trust isn’t just the greatest currency, It’s the only currency, Once trust is gone in any form of currency, the value is gone.

Richie Norton

But when money came into the picture it changed the way people did business. People didn’t trust one another, but they trusted money and its imaginary value.
When you go to a shop to buy something, you don’t know the shop owner and likewise, the shop owner doesn’t know you. So how can you trust one another? You don’t. The shop owner trusts the money in your hand and its imaginary value.
You only have to trust in the imaginary value of the money and you can trade with the world.

In God we trust, All others pay cash.

Jean Shepherd

Pareto Distribution

Pareto Distribution was created by the Italian civil engineer, economist, and sociologist Vilfredo Pareto.

It shows the distribution of wealth and creativity among individuals.
As shown in the graph, A small group of individuals has all the money. and all others have none. This is true for creativity too. but the question is why?

Let’s see the with an example, Let’s say there are 1000 people who are given 10$ each, and then they started to trade with each other after a few trades the distribution of money looks like a normal distribution.

But when the trade continues, the graph starts to look like a Pareto distribution.

So if the trade game is played long enough almost every time a small group of people will have all the money.

There will always be people who are very good at what they do compare to others, so they will get paid more to do that thing. And the small group of people that have all the money actually employ people who are at the lower end of the spectrum.

It’s not a zero-sum game

The Rich are getting Richer and the Poor are getting Poorer is totally not true.

The Truth is the Rich are getting Richer and the Poor are getting Richer with them.

Wealth is not static, it gets created every time a good product is launched into the market.

The Top 1% have wealth that is invested in businesses that employ thousands of people, Those people will spend that money in the market to purchase products, the company which manufactures that product will get an increase in their sale hence expanding their business which would require employing more people and then the cycle repeats itself. So everybody is getting rich.

Research Material

Rich Dad Poor Dad

Sapiens: A Brief History of Humankind

Personality and it’s Transformations

The concept of the Future

Leave a Reply