If certain people were the first money owners, then how did they get their money?
How could someone have paid the first money owners with money, if nobody before the first money owners had any money?
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$\begingroup$ Money is declared legal tender. It's there because the government decided to issue it. It's printed /minted and circulated by the government. It's not much different from the game called monopoly. You use the monopoly money because the game designers made it available. $\endgroup$– AlexSep 20, 2022 at 19:40
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$\begingroup$ I think the monopoly game does not concern itself with this question. Entities "somehow" have money and they just give it to players. Declaring money to be legal tender is one thing but getting it in people's hands is another matter. I don't think the government just gave everyone some amount of money to start with. $\endgroup$– raptSep 20, 2022 at 22:33
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$\begingroup$ that's how it usually works though. When the Euro war introduced it wasn't different either. There was something else before (local currencies) but these were made useless and all you could do is change your old money (further back, whatever means of payment) into new money, of you had any. $\endgroup$– AlexSep 21, 2022 at 4:18
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$\begingroup$ The point of the question is to ask how the transition from "no currency" to "some currency" happened. Not from "one currency" to "another currency" which is easy to imagine. $\endgroup$– raptSep 21, 2022 at 16:06
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3 Answers
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Money developed from commodities or debt indicators (such as debt measuring sticks). Some sort of primitive money was used in pre-history so exact origin is disputed (d’Errico et al. 2012, Ferguson 2008, Glyn 2002).
Hence, what has happened is that people first were exchanging goods for other goods (what in economics we would call barter or what some social anthropologists call gift giving if it’s within some community connected by social relations). At some point either one of the two things happened:
One of the commodities was widely desired (grain, sheep, stones, metals) and people realized they can avoid the problem of double coincidence of wants by just generally accepting that commodity. At a point of time that most people in the community accepted that commodity in payment, the commodity became money. For example, if that commodity was silver everyone with silver had some money from that point on.
If money developed from debt then at some point people started to trade tally sticks/bones that represented some amount of something owed (like grain). In that case anyone who had some tally stick/bone would have money once it would be generally accepted.
In both case the money come from something already preexisting in community. Historically people didn’t just one day invented money, rather some goods gradually became money over time. Hence at the point people developed money, most people already had some money by accumulating some commodities in the past through various ways.
answered Sep 20, 2022 at 16:48
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$\begingroup$ In path (2) how did we get from a system that intrinsically balances to 0, to one with a nonzero overall balance? $\endgroup$ Sep 20, 2022 at 18:53
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$\begingroup$ Is there more money in existence than debt? I think so. Yet, path 2 only allows the creation of equal amounts of money and debt. $\endgroup$ Sep 20, 2022 at 23:58
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1$\begingroup$ @user253751 Seems like that would have happened with the ascent of states, which could mint money. I have read (but hardly know anything about this) is that a reason for the spread (not the development) of money was that the state demanded taxes in its currency, forcing you to acquire some of it by participating in the market. This also made the state budget somewhat more flexible. When the state creates its currency, there is no debt covering (though there is an expected future obligation). $\endgroup$– GiskardSep 21, 2022 at 7:50
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Money represents property, that is assets. If it represents nothing then it's worth nothing. This is why we were on the gold standard for a long time until at some point the economy felt stable enough to let it float somewhat free. But of course everytime investors feel scared there's a rush to gold.
So it's property that defined wealth first. Maybe furs, clothing, a good battle-axe. Maybe a woman - we are talking prehistory here - or a hut of a kind. Maybe a boat - a canoe. Amd of course food. That was wealth. As bartering developed the idea of a common but rare token, that was easily transported but signified a storage of wealth developed. I've heard of cowrie shells being used in places - perhaps the Americas or the Pacific. I don't recall.
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when goods exchanging，goods can not shift at same time，it must be one thing give one man in advance，and if record it， we will have one un-standard currency. secend, third one comfirm the "currency" then it will change to standarded.
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$\begingroup$ we could use paper to record, we could use gold or shell to embody record, or even just use brian or comunity consensus to record. $\endgroup$– 李俊宇Oct 3, 2022 at 23:24