Brief History on Barter and Trade Economies
Bartering has been around for as long as humans have wanted things they didn’t have. Basic bartering would include a person offering a chicken in exchange for a basket of vegetables. This quickly leads to the problem of equivalent exchange. The person with the vegetables may not be interested in the chicken but is interested in trading for a jar of honey. The person with the chicken can’t get what they need without bartering with a third party for the honey.
This inequality in the valuation of products caused major upsets when a loaf of bread cost one chicken on Monday and 3 chickens on Tuesday. To simplify this, currency was introduced, allowing people to sell items and perform tasks for a set amount of money which could then be traded with others for the items and services they desired.
So what is currency? Currency can be anything that everyone agrees has value. It could be precious metals such as gold and silver or consumables such as salt and corn which have all been used by ancient civilizations. Today currency is typically paper or coins that have only a perceived value and no intrinsic value like gold or silver. Instead, paper currency is simply a representation of time and value, just like poker chips used in a casino. Because most currency has no intrinsic value it is subject to inflation such as what happened to the South’s currency during the American Civil War or the currency of Germany between WWI and WWII.