WHAT IS MONEY?
It is a nice topic explained in a book "Increase your Financial IQ" written by R.T.Kiyosaki who also wrote the bestseller RDPD.While I recommend RDPD to anyone IYFIQ is more of his achievements and products. Anyways the book in the end(Afterwords) did explain the thing called the money.
According to the author it all started with the BARTER SYSTEM when there was no money.So someone could exchange Tomatoes for Eggs, but what if he did not want the Eggs? Hence came the first money in forms of Shells , Beads , Coloured rocks , Arrowheads etc .COMMODITIES became the money now.So these commodities can now be exchanged between each other and all accepted it universal worth(read value).For years it continued like this till Gold and Silver came to the picture and became the universal money replacing all commodities.According to the author a true money has "Intrinsic Value" e.g. Gold and Silver can be used as something else than money e.g. jewellery.True money can also be measured accurately,can be stored for years and needed to be compact enough to be carried long distance .These could not be satisfied by tomatoes,Oils ,Eggs or Shells.Now after sometime the Gold and silver became unsafe to carry with themselves so individuals started to place them with someone(say Mr.X) having a safe and who is credible.Mr. X would in return give a receipt for Gold/Silver .Hence came the earliest form of RECEIPT MONEY or PAPER MONEY.Again these receipts could be exchanged for Goods and the person with the receipt can always go to Mr. X for the precious Gold or Silver.As time progressed many Mr.X united together to form what we today know as BANK.As long as people trust the banker they are happy trading this Paper receipt or what we call today as MONEY .Hence each Paper money is backed by equal amount of gold with the bank/Government .For your Information US changed this system in 1970s and which,according to the author, has recently led to the down fall of US Economy. So now I understand what does the note " I PROMISE TO PAY THE BEARER THE SUM OF X RUPEES " on any Paper money means !!!
