The Role and Nature of Money

“The role and nature of money”
There is a scene in the movie called “The Boiler Room”, where Ben Affleck pays the role of a recruiter in a brokerage firm. During his recruitment speech he says “anybody tells you money is the root of all evil, doesn’t f**Kin’ have any. They say money can’t buy happiness? Look at my f**kin’ smile on my face. Ear to ear, baby…” so the question is what is money? Different people have different meaning for money. Some people equate money as having wealth like “Bill Gates has a lot of money” In economics however, the term money is specifically used to refer to currency which might not be the only source of wealth one has. The simplest definition of money is something of value. There are many functions of money and different kind of money. To understand the role and nature of money we first have to briefly explore the history of money.
In the beginning people use the barter system where goods and services were exchanged for other goods and services to benefit participating parties equally in their mutual interest. This system worked for thousands of years but it lacked verity, what if you wanted something that the other person had but the other person was not interested in what you had to offer. To solve that problem, humans developed what is known as commodity money where bags of salt, livestock and even crops were exchanged and used as an early form of payment.
As the metal age came so did the introduction of precious metal as money or currency. In China shells were used as money and later paper money became common. Lydians were the first in the Western world to use metal coins as currency. Then came the age of representative money where what money itself was made up of no longer had to be valuable. Representative money was backed by its government and or a bank. The idea was that the government or the bank promised the receiver of the money that papers issued by the government or the bank would be exchanged for a set amount of...