Money is that stuff that makes the world go ’round and buys food, fuel and shelter. When I was growing up, my father used to say that if you didn’t have any money you were not a man. Money is that tangible thing, that real entity, that can be demonstrated and seen with your own eyes. To most people’s money is that invisible, pocket change that sits in their wallet. For others it is a tool for buying and selling, but whatever it is used for, money has always been the central indicator of power and wealth in the world.
The exchange of one commodity for another is the foundation of all market exchange. The money is that thing that makes it possible for exchange. Without money, trade would simply be barter, which involved raw goods being bartered away on a regular basis. Without money, you could not carry around your favourite pair of jeans or buy that T-Shirt you’ve had your eye on. You cannot carry around your favourite book or CDs. But without money, there can be no exchange of goods or services, and therefore there can be no market.
Bartering originated with the ancient Egyptians, who found that cattle were useful for bartering. Cattle were easy to find and kill; therefore they were easy to exchange for other goods. Bartering spread throughout the ancient world, initially as a means of farming, and later as a profitable way of trading between cities, villages and nations. Although it still exists today in certain parts of Africa and Asia, most modern economies have moved away from barter exchanges, with most transactions instead taking place with the help of money or financial assets.
However, money isn’t the only thing that money can be used for. It can also be used for different things, including: gold, silver, gold bars and coins, different things like bonds, insurance, and stamps. Gold is perhaps the best known physical commodity that can be exchanged for other goods. Therefore, the value of gold has always been high, and this value is subject to the relative strength of different currencies.
The value of commodities, including gold and silver, is not based on the political situation or government policies, but on the production of these commodities themselves. Gold can be produced easily, whereas the production of fiat money, which includes bank notes, is very difficult. Therefore, if there was no gold or silver in the world, then the price of commodities would be impossible to determine. This is how the legal tender laws help to make gold and silver valuable as well as a basic unit of exchange.
Bartering allows a market to develop between people who have different goods that they want to trade for other goods. Bartering also brings together large groups of people who normally would not be able to meet each other’s needs if they were to come into contact with one another physically. There are three basic forms of bartering that usually take place in the world today. The first type of bartering takes place in eBay or online auction sites, where products are bought and sold for cash. The second form of bartering takes place in marketplaces where buyers and sellers come together and exchange items such as food, cars, musical instruments, home appliances, and other goods.