The Efficiency Of Money

Solving The Problem

The invention that solved the coincidence of wants was money. Money allowed gave us the opportunity to store up our economic energy and use this as a medium of exchange. Of course there were many trials and errors of what this new money would be: pearls, seashells and even tulips. But, for the money to be successful it had to have all the properties that we talked about before. The ones that came out on top were gold and silver.

Over time, people gained faith in using gold and silver as money. Confidence was established in that the gold and silver used yesterday would buy the same number of goods tomorrow. Exchange rates were starting to form, one cow = one ounce of gold, for example. Stability and trust form in the economy. Sound money = sound economy.

Source

The earliest signs of gold and silver being used as money was in Egypt around 5,000BC. There is no surprise that as they were the first civilisation to use this new technology that vast amounts of prosperity followed. The Egyptian empire sailed past everyone else due to their new found productivity in trade. The Egyptians were able to create some of the most profound pieces of architecture ever seen. Some of their crowning achievements include: The Pyramids of Giza and The Great Sphinx.

Where is this Egyptian empire today? What happened to the economy when it was built on sound money?

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