Current forms of money (paper money) has no actual value physically, but represents a medium of exchange that is widely accepted and can be used for trading. In the past people have used precious stones or shells as a form of currency. Many people ask what the point of money is so I’ll provide an example.
Farmer A makes apples, farmer W produces wheat… Farmer A wants some wheat to make bread to he and farmer W agree on an exchange. 1 bag of apples for 1 bag of wheat. Perfect, no money required yes?
However life is generally always more complicated than this. Farmer W may not want apples, or they may not be in season. In this case, money as a common medium of exchange enables farmer A to sell his apples at a market for “money” during their season. For the rest of the year he has something can easily be traded. Farmer W will always accept money for his wheat because he wants to be able to buy milk, tools, shoes etc. Thus the tool shop, the shoe man and the cow farmer obtain a common medium of exchange to buy apples and wheat etc.
Farmer A makes apples, farmer W produces wheat… Farmer A wants some wheat to make bread to he and farmer W agree on an exchange. 1 bag of apples for 1 bag of wheat. Perfect, no money required yes?
However life is generally always more complicated than this. Farmer W may not want apples, or they may not be in season. In this case, money as a common medium of exchange enables farmer A to sell his apples at a market for “money” during their season. For the rest of the year he has something can easily be traded. Farmer W will always accept money for his wheat because he wants to be able to buy milk, tools, shoes etc. Thus the tool shop, the shoe man and the cow farmer obtain a common medium of exchange to buy apples and wheat etc.
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