What is Money?

In this video we debunk a few myths about the origin of currency and how currency is used in modern economies.

Money is a currency of exchange. Likely the currency issued by the state.

The common understanding is that ancient markets were structured around bartering and over time an medium of exchange was developed, such as a precious metal. This is an historical myth. There’s no anthropological evidence that any ancient society based an economy on bartering. In fact, quite the opposite. The earliest found writing often records financial transactions and details of debts. The earliest exchanges evolved out of debt.

The government distributes the currency to the people by paying for goods and services rendered to the government and eventually some portion of this currency is then removed from the general economy by taxation. The government creates the currency, the currency is then supplied to the economy and then the government creates demand for that currency by taking it back in taxes. Government spending is the origin point of money. Taxes are the destruction of money. Government spending is limited only by the full employment of available resources, beyond which we would see inflation.

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Sources:
Debt: The First 5000 Years - David Graeber https://archive.org/details/Debt-The_...

Modern Money Theory for Beginners - L. Randall Wray    • L. Randall Wray - Modern Money Theory...  

What Tally Sticks Tell Us About How Money Works - BBC https://www.bbc.com/news/business-401...


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