10 Things You Didn’t Know About Money

We use money every day, whether we pay something with cash or our credit card. But, how much do we really know about it? Here are 10 things you probably didn’t know about money.

1 – Highest inflation in recent history
When it comes to inflation, no country comes close to Zimbabwe in recent history. Early in the 21st century, the country had a breathtaking inflation that reached the rate of 98% per day. This led to a price of 300 billion Zimbabwean dollars for one loaf of bread. The government even issued a 100 dollar trillion note (that is a number with 14 zeroes, in case you didn’t know), which is the highest denomination in the world ever issued.

2 – Things used as money in the past
We are so used to paying with credit cards and cash that we rarely think about other forms of payments that were used in the past. Things such as shells, buckskins, tobacco, salt and barley were all used as a currency at some point in time. While it’s highly unlikely that someone would carry around 20 buckskins today just to buy a new smart phone (even if a store would accept it), it is interesting knowing that people used these types of items to trade.

3 – World’s first modern bankers
Some of the earliest examples of modern banking date back to 17th century London. During this period in time, rich merchants would store their gold with the goldsmiths of London. Since they owned rather large private vaults, they were able to store the gold in return for a fee. The goldsmiths would issue a receipt that certified the quantity and quality of the gold deposited by merchants, and only the person who deposited the gold could collect it. With time, goldsmiths began to lend the money to interested parties on behalf of the depositor, which is the first example of modern banking.

4 – Why do coins have ridges?
Have you ever wondered why most coins have ridges along their sides? The answer goes back to 18th century, when most coins were produced from precious metals like silver and gold. Some criminals started to file small amounts from the edges of every coin they could get their hands on, and then sell the precious metals. This is the main reason reeded edges were eventually introduced to the coin design. Right now none of the coins contain precious metals, but ridges are still used since they are useful to the visually impaired.

5 – World’s first ATM
While taking a bath, Scottish inventor John Shepherd-Barron come up with a genius device that is today referred to as automatic teller machine, or ATM. His idea was to create a machine that would dispense paper currency at any time of the day. He pitched his idea to the British bank Barclays, and not too long after that the first model was installed in London, back in 1967. One of the main differences between this ATM and modern machines is that this one didn’t charge any fees.

6 – In today’s world, all money is created as debt
Did you know that less than 5 percent of today’s money is in the form of bills or coins? Take yourself for example. Chances are you have some cash lying around, but most of your money only exists in your bank account. However, when you deposit a certain amount of money in your bank account it stops being your money. You are actually giving the bank a loan, and the bank promises to pay you back the money it owes you. In the meantime, they can do whatever they want with it. Banks usually loan the money to businesses, individuals, other banks, and even countries. Essentially, the entire world economy now works on a system of credit provided by banks, and if that system was to break down – everyone would suffer.

7 – Money is no longer backed by anything tangible
Long gone are the days when money was backed by something tangible like gold for example. United States was one of the last countries to stop using the gold standard (in the early 1970s) and not a single currency in the world today is backed by anything tangible. Instead, money is backed by people’s faith in creditworthiness and stability of the government.

8 – Money is dirty
All right, you probably knew that; however, did you know that a significant number of US bills are contaminated by cocaine? This comes as no surprise as drug traffickers usually use cocaine-covered hands to move cash, which contaminates other bills as well when they enter the system. Studies have also found numerous germs and pathogens, and even faecal matter.

9 – World’s first paper money
The first paper bills in the world were created and used by the Chinese during the Tang Dynasty (618-907 AD), a long time before paper money started appearing in Europe. However, China completely eliminated paper money in 1455 due to soaring inflation, and it took several hundred years before the country started using it again.

10 – The three functions of money
In case you didn’t know – money has three primary purposes. It serves as a medium of exchange, measurement of value and store of value. When you use money as an intermediary in trade, it becomes a medium of exchange. As you already know, you can exchange money for many different goods and services. Money also acts as a measurement of value. It is a basis for quoting prices of goods and services, and comparing the values of different objects. Finally, money can act as a store of value. This means you can safely store it, and when you retrieve it at later point in time, you will be able to use it as a medium of exchange.

Courtesy of www.uncoverdiscover.com