Money
Money is a medium of exchange, which has the advantage of eliminating inefficiencies of barter; a unit of account, which facilitates valuation and calculation; and a store of value, which allows economic transactions to be conducted over long periods as well as geographical distances. To perform all these functions optimally, money has to be available, affordable, durable, fungible, portable and reliable. Because they fulfil most of these criteria, metals such as gold, silver and bronze were for millenia regarded as the ideal monetary raw material.
But the value of precious metal is not absolute. Money is worth only what someone else is willing to give you for it. An increase in its supply will not make a society richer, though it may enrich the government that monopolizes the production of money. Other things being equal, monetary expansion will merely make prices higher.
On the back of a ten-dollar bill, it says, ‘In God We Trust’. But the person you are really trusting when you accept one of these in payment is the Secretary of the US Treasury (successor to Alexander Hamilton, the man on the ten-dollar bill). When an American exchanges his goods or his labor for a fistful of dollars, he/she is essentially trusting the Secretary of the US Treasury (and by extension, the Chairman of the Federal Reserve System), not to repeat the errors that so many people in history made and manufacture so many of these things that they end up being worth no more than the paper they are printed on.
Money is a matter of belief, even faith: belief in the person paying us; belief in the person issuing the money he uses or the institution that honors his checks or transfers. Money is not metal. It is trust inscribed. And it does not seem to matter much where it is inscribed: on silver, on clay, on paper, on a liquid crystal display.
The central relationship that money crystallizes is between lender and borrower.
In ancient Babylon, the lending system is evidently sophisticated. Debts were transferable. Hence, ‘pay the bearer’ rather than a named creditor. Clay receipts or drafts were issued to those who deposited grain or other commodities at royal palaces or temples.
Money does not literally make the world go round. But it does make staggering quantities of people, goods and services go around the world.