Understanding Money and its Importance : Article 1

Let me take you to 8000 BC. To the older generations, I would have mentioned a number of things to highlight the difference with today’s world but to the millennials its sufficient to say that there was no internet. Period.

Average Joe and Trickster Trump are sitting together in a community market which is stone’s throw from their houses and also happens to be a small pile of stones.

Joe says he has had a good wheat crop and he wants to buy some chickens in exchange of some of his crop. Trump did not have any chickens but he had a couple of goats and wanted wheat for his second wedding party.

They could not understand what to do. After a few hours of sitting around and discussing hard, they saw Oblivious Obama passing by with his chicken flock. While Joe was still scratching his head, Trump brokered a deal with Obama. According to this deal, Obama would give 4 chickens for 6 kgs of wheat from Joe. Trump would then take 6 kgs of wheat from Obama and give his two goats in Exchange. All of them agreed and off they went.

This is an example of “barter”.

Few centuries passed, the demand of various different types of things grew. People would now need clothes, weapons, farm equipments, shoes, barley etc. and bartering became a very complicated process to manage. A clever girl called Kamala, found some cowrie shells and gave to Obama in exchange of wheat. Cowrie shells were beautiful and could be sold as jewelry. So, Obama accepted the exchange. Soon, everyone came to know about Cowrie shells and they started using it as “medium of exchange”. It was easy to count, store and carry. It was not possible to make it at home. In order to get a new one, someone had to do the hard work of spending time and searching for the same. This meant that now people did not have to necessarily barter. The village elders took a decision that Cowrie shells are now the official currency of the village and everyone placed their trust in Cowrie shells.

All was going hunk dory till the village had to face a drought one summer and there was no crop to eat. Joe, Trump and Obama went to a nearby village of Problematic Putin to buy wheat and offered shells in return. Putin did not know anything about shells. He had not trust in its value. He refused.

What would happen next ? Can you guess ?

This is the first article in the series of articles I am writing to create interest and understanding about money for the youngsters, Teenagers and Millennials. If you find it interesting, please share it with people you know.