Money, Money, Money….MONEY!

1. Money, Money, Money….MONEY! • Chapter 11 – not bankruptcy, in your book goofball!

2. Vocabulary • Barter economy • Mutual Coincidence of Wants • Money • Medium of Exchange • Measure of Value • Store of Value • Commodity Money • Fiat Money • Specie • Monetary Unit*

3. In the beginning… • 90 of these • Were traded fora hundred pound barrel of this. Virginia 1620*

4. Barter • Relies on trade. • There’s a problem though. • Let’s show it by playing a game.*

5. The Groups • 1. Blacksmith • 2. Cattle Rancher • 3. Corn Farmer • 4. Lumberjack • 5. Shoemaker*

6. Trade Rules • Axes can be traded for Hides or Corn. • Hides can be traded for Axes or Wood • Corn can be traded for Axes or Shoes • Wood can be traded for Hides or Shoes • Shoes can be traded for Corn or Wood*

7. Ok, Debrief • Were you successful? • What was the major problem? • What would happen if we added in different values for each trade item?*

9. 3 Functions of Money • 1. Medium of exchange – Must be accepted by all parties as payment for goods & services.*

10. 3 Functions of Money • 2. Measure of Value • Accepted as the common denominator used to express worth. • Allows us to make comparisons with other products.*

11. 3 Functions of Money • 3. Store of Value • Allows us to save the purchasing power until needed.*

12. Types of Money • Commodity money – has another use besides money. • Agreed upon by the people exchanging.* Tea Brick - China Tobacco - USA Barley - USA Compressed Cheese - Russia

13. Fiat Money • Issued by government decree (fiat.)*

14. Paper Currency • Originally US state laws allowed individuals & banks to issue their own paper money – provided it was backed up by gold & silver. • Continental dollars however weren’t backed up by anything and were eventually worthless. • ¼ Billion printed by 1783*

15. Specie • Coins made from gold or silver.*

16. The Almighty Thaler • 2 bits, • 4 bits • 6 bits, • A peso! • All for the Thaler… • Stand up and say so!*

17. Gotcha! • Colonial Americans preferred specie to paper money because it was always useful and accepted in trade. • Most specie in colonies were from Spanish Peso. • The old Spanish Doubloons, or “pieces of 8” were the same size as Austrians Thalers.*

18. No pieces of 8 for the USA • Ben Franklin and Alexander Hamilton set the US Currency up on 10ths. • Eagles $10 • Half Eagles $5 • Quarter Eagles $2.50 • Dollars or Units $1 • Half Dollars $0.50 • Quarter Dollars $0.25 • Dismes $0.10 • Half Dismes $0.05 • Cents $0.01 • Half Cents $0.005*

19. Characteristics of Money • Portability • Durability • Divisibility • Limited Availability*

21. Quiz Time!