How Money Came into Being
There was a time when money did not exist. Long, long ago, people at a stage called " subsistence economy" produced only what they needed. Their needs were few but their methods of production were such that they spent most of their living hours in an unceasing battle for personal survival. They had no need for money.
But then people began to improve their methods of production and began to produce more than they needed. More than that, they began to specialize. The person who could make good
shoes began to concentrate on making shoes and exchanging shoes for food and other items he needed. He was ushered into what is known as a "market economy," in which
goods were produced mostly to be
exchanged in the open market.
The first method of exhange is called "
barter " by which goods are exchanged physically. This proved to be unwieldy because of the difficulty of equalizing the exchange. Suppose one
needed a pair of slippers and had nothing to barter with but one cow? So the people had to invent something to simply and facilitate the
Exchange of
goods.
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