Lesson Summary
Before learning money management principles, we must set the foundation. Students will learn the historical concepts of money, emphasizing its role as a medium of exchange and a representation of stored energy. We will discuss the evolution of money, beginning with bartering and early payment methods, and the various historical forms of money, from sea shells and barley to gold and silver, including their significance and limitations!
The lesson also reviews money manipulation by authorities, illustrated by historical instances like kings shaving coin edges for personal wealth. Transitioning to the American context, the creation of the Federal Reserve in 1910 on Jekyll Island is highlighted as a pivotal moment that resulted in unlimited money creation and inflation. The impact of inflation on current money value is explained through examples like the Zimbabwe dollar.
The lesson underscores how we are required to use fiat currency issued by central banks like the Federal Reserve, which isn’t backed by any hard asset, such as gold or silver. Further highlighted is the Fed’s role in manipulating prices and transferring wealth to banks, who then lend money to the public at high interest rates. The section presents different alternatives such as using gold, silver, or engaging in online bartering.
Finally, the distinction between hard money (difficult to reproduce, like gold coins) and soft money (fiat money, not tied to any hard asset) is examined. In a political context, the definitions of hard and soft money extend to contributions for campaigns and political parties, respectively, with regulatory variations.
This comprehensive overview aims to equip students with a historical understanding of money, laying the groundwork for the rest of the course material.
