money – its origin & its importance eco 473 – dr. dennis foster
TRANSCRIPT
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Money –Its Origin
& Its Importance
ECO 473 – Dr. Dennis Foster
![Page 2: Money – Its Origin & Its Importance ECO 473 – Dr. Dennis Foster](https://reader036.vdocument.in/reader036/viewer/2022062408/56649ecf5503460f94bdcad6/html5/thumbnails/2.jpg)
Backstory – The “Austrian” SchoolMenger
(Principles of Economics)
Böhm-Bawerk(Capital & Interest)
Mises(Theory of Money & Credit; Human Action)
Hayek(Individualism & Economic Order)
(The Road to Serfdom)
Rothbard(Man, Economy & State)(The Mystery of Banking)
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The Origins of Money• Arises in a market setting …
– Direct exchange (barter) gives way to …
– Indirect exchange• Goods serve as mediums of exchange.
• When we settle down to one = money.
– Characteristics:• Portable, store of value, relatively scarce, divisible,
widely used, easily recognized.
• If available, gold and silver.
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Money solves problems …• Double coincidence of wantsDouble coincidence of wants– Allows for specialization of labor.
• IndivisibilitiesIndivisibilities– Even with barter, discrete units may
still be difficult.
• Calculation of profit and loss.Calculation of profit and loss.– Business formation is possible.– Division of labor Economic growth
Rising living standards.
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Is Money “Invented” by the State?• No.No.– Even with the idea, it is difficult to image
how a king could create the institution of money.– Governments have long been involved w/money.• Minting (income=seignorage) & debasing.• Issue unbacked claims to money – FR Notes.• Supplant the market money – FR Notes.
• Note that money unit is some weight of …Note that money unit is some weight of …• Pound sterling – a pound of silver.• Dollar – an ounce of silver.• POW camp & cigarettes as money.
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ECO 473 – Dr. Dennis Foster
Money –Its Origin
& Its Importance