Trade: trading goes back into our ancient history
BARTERING: simple form of trading

MONEY

When money first develops, it always starts out as "commodity money"
- the commodity is something common and it becomes currency

Then money moves to specie (precious metal: gold and silver)
(gold/silver is itself a commodity)

As the economy grows, it outgrows the supply of specie and it moves to
FIAT MONEY (money by law; or, it is money because we say so)

note: our money is not backed by gold or silver and has not been since
the 1930's

Money is not defined by what it is, it is defined by what it does:
by its fuction

FUNCTION OF MONEY

1. a medium of exhange (has to be something people are willing
to take)
2. has to be able to store value (has to be able to last over a period
of time)
problem w/barter: some barter items rot or can be ruined)
3. money is a measure of value (everybody must be able to tell the
value of it -- provides a common frame of reference for
any transaction)

The Equation of Exchange

M * V = Q * P

The amount of money (m) multiplied by its velocity (v) is equal to the
quantity of goods and services (q) multiplied by prices (p)

and easy way to put the equation:

MONEY = STUFF

Money is a medium of exchange. For what? ... for Stuff.

Money stores value. Why? To get Stuff ... later.

Money measures value. Of what? the value of Stuff.

Therefore.... You and I don't want money ---- we want Stuff.

Ex.
The man who dies in poverty w/ millions of dollars in the attic.
He was poor: no stuff.

Donald Trump who at one time declared bankruptcy was never poor.
He always had stuff.

Money has little or no intrinsic value.
What gives money value is its ability to convert to stuff.
(ex. value of Confederate money to buy stuff)

Income and Wealth are NOT interchangeable terms.
Income is money earned and wealth is stuff.
In the U.S., retiree's have the highest income as a population segment, but the lowest level of wealth.

INFLATION

Inflation is too much money in comparison to the amount of
stuff available.

Currency and coin comprise less than 10% of U.S. money supply.
There is not enough money to give everyone dollars if everyone went to
make a withdrawal. Currency is a numbers game on paper. (checkbooks)

The computerization of money is as much about convenience and control
as it is about anything else.