Understanding Money


We live in a society that is, to a large extent, cashless: we spend most of our money using checks, credit cards, debit cards, automatic billpay services, and other abstract tools. When we use the Internet, it is even more extreme: everything is cashless, and all transactions are abstract.

Nevertheless, no type of abstract transaction - including Internet commerce - operates in an isolated environment. Money is money, and when you buy and sell, even over the Internet, you do so within the confines of our everyday monetary system. For example, even though it may be fast and easy to use your credit card on the Internet, if you don't pay your bill on time, something unpleasant will happen to you and it will happen off the Net.

In order to look out for your own interests, you need a sense of perspective, an understanding of why our monetary system is the way it is and what it means to you. The purpose of this essay to help you understand money: What is it? Where did it come from? How has it evolved? By the time you finish reading, you will understand the basic ideas that underlie our modern economic system, and why they are important to your life.

 

 

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