Why do we have money?


Me and my piggy bank

When I was a young bunny, I was surprised when I first heard that small pieces of paper and metal were actually worth something. A few weeks after this, I read a story that offered an explanation. The story went something like this: Many years ago, people traded the things they grew, caught, or made for a living. So, if they caught fish and wanted apples, they would trade the fish with someone who wanted fish but had too many apples. The problem with this was that you had to find someone who wanted something you had and was willing to give you what you wanted. As you may imagine, this became quite complicated after a while, since the things you had wouldn’t necessarily last forever. Thus, someone asked, “What if everyone could trade with everyone?” To make this possible, everyone must have something that everyone wants. Money was then invented. People would then trade the things they had for money and traded this money for the things they actually needed. This reduced the amount of time needed to complete trades, allowing trades to happen more frequently, and preventing goods from getting old or spoiled. As you can see, these were very positive improvements and solved the major problem of the original trading system, and hence, money took hold as the most common trading system.

I really wonder what it would be like today if money did not exist. Money is sure quite convenient.


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