1.) What is the origin of money?
Before money existed, society used what’s called barter. Barter, putting this as an example, is when someone goes as far as offering a castle, or a piece of it in exchange for a piece of bread. That’s exaggerating it a bit, but you can kind of get an idea of how people got things from each other back then, before the government slowly introduced paper money.
2.) Name and explain three disadvantages that have been identified with fiat money
A primary disadvantage of fiat money is that it risks losing its value due to inflation or become entirely worthless during hyperinflation for the simplest reason that it is not backed up by physical booking, especially objects such as gold and silver.
Here’s another disadvantage that’s more common, fiat money also forces us to rely on other parties. We must rely on the government to make it, banks to hold it, and vendors to judge its value per product. There’s little to no control from the spender’s perspective. Also, the more one earns, the more they’re taxed (I think many of us really know that one). This isn’t much of a momentum for many to spread funds.
Lastly, it’s a no-brainer to produce counterfeit fiat money. Considering the assets are made simply of paper, technically anyone can print a dollar and spend it. From there, it’s up to the vendor to decipher if a dollar is real or not.
Thanks for reading this essay! A lot of ideas I presented here aren’t my own, but with added knowledge and more simple explanation :). As always have a blessed rest of your day!
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