Maturing History of money

Hey guys this chapter is written by my dear boyfriend, he is a little bit nerdy and likes economics, he will give you a glimpse of money evolution throughout history I hope you enjoy the journey! Caution for all history and economics haters :') this chapter is certainly not for you

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In ancient worlds, like in old egypt and Mesopotamien civilizations People used to exchange goods Like if i want to get a goat from u , i would give u an amount of wheat Or any other good This system is called : bartering

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Later on in history, and precisely in china, coins and notes are starting to be the standards of trade In ancient Carthage, the marchant used to put his goods on display and hide And people would come,take the goods and pay what they think the good is worth At that time, the coin was made of gold So its value is in the coin itself

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But thousands years later,this changed And nations started linking their currency (coins and bank notes) that is made with cheap materials, to gold Which means, ur currency is as strong as ur reserve in gold That s why , currently, the more gold your national bank has, the more stable your currency is But , what if you don't have enough gold to stabilise your currency? What if at some point u wanted to print money in order to have lots of money? What s the worst that can happen? Well, the country will face inflation

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Like the one that happened in Germany in the 1930's At that time, Germany has tremendous debts to pay to the allied forces after the WW1 the economy was in bad shape, so the state decided to print money Without having enough gold to cover for its value So what happened? Inflation happened A loaf of bread would cost millions of german Marks The bank notes lost its value, ppl needed to carry kilos of bank notes to buy a chicken

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After the second world war Major powers in the world met in bretton woods in the USA, and agreed to link the US dollar to gold Which means, if a certain country has a sum of US dollars, the US government is obliged to give back gold in exchange of that countries dollars Let me explain Say there s a country like france, that has like 100 million US dollars and want to exchange them to their worth of gold The US is obliged to give France as much gold as France has dollars That's the moment when the US dollar became an international currency

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And the USA became the strongest economy ever

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But this system didn't hold for too long

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Because by the time The US government started to print more money than the gold it has

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And if all countries demanded to exchange their dollars to gold The US won't be able to do it

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So,in 1971 The US president Nixon broke the link between the US dollar and gold And from now on,the dollar is a guarantee on itself And its strength is based not on gold, but on the strength of the US economy

Oh dear :'), but i liked how excited he was, telling me all this