Have you ever wondered about the first day of exchange and barter?
Maybe how money was born? I welcome you to jump onto my noble steed called Tornado and back in time we go!
As we arrive into the 10th Century we are witnessing the exchange between a man who is busy ” braaing” as we would say in South Africa which is our unique way of taking meat, putting it onto a grill and turning it to avoid burning it.
Specimen B gets a whiff of this “braai” and wants to trade his berries for this. The only problem is that the “braai master” values his meat much more than berries and thus a problem. The berries forester even outlines the health benefits of the berries but to no prevail. a Trade seems highly unlikely, however the forester takes out his “shiny rocks” and immediately the Specimen A is attracted to this. It was scarce something he has never seen before, something that does not rust or corrode. Some might call this an immortal metal, but we shall stick to gold. Everyone valued gold and as the saying says: “as good as gold” kept its pound of flesh.
All was good in the land of trade until a new profession came along. Yes the thief was observing from a far that everyone valued gold and if they valued gold so much he should just aim for that and this will satisfy his every want and need. a High risk job one might say!
While the tradesman was out sourcing stock he left his gold unprotected and our next person of importance pops in and offers a solution which was hard to refuse. He offered safe keeping for the tradesman gold, for a small fee naturally.
At last the Gold Smith was created and with his new found power and “trust” the people have in him he can print notes or I.O.U’S like confetti so that people dont have the burden of carrying big bags of gold around.Example: The i.o.u. would state that I owe the bearer of this note 10 Gold Coins( If you go back into our history our notes use to be backed by gold,but now it would only backed by the government, you can make your conclusions from here.)
The Gold Smith figured out that he could write I.O.U’S without the amount of gold in the vault and on top of it ask interest on it with gold he never even had. How could anyone possible catch him out as no one would ever ask all their gold at once, unless everyone do ask for their gold at once. Wouldn’t you know but the gold smith got caught out after the discovery of no gold in the vaults……
There are 3 things that you shouldn’t do with man
1. Never mess with another man’s woman.
2. Never mess with another man’s ego.
3. Most importantly never mess with another man’s money.
or else the man will mess with you.
Yes back then they hanged them and they hanged them high, but not so much of what he has done, but an evil invention was born. an Ideology that would have the impact bigger than an atomic bomb.
Keep your eyes focused on the next post but not too focused as you might miss what is right in front of you.;-)
Part 2 : Fractional reserve Banking