One of the most interesting studies in history might be the history of money. It is essentially a history of what things have interested humankind enough to warrant their high valuation. While we started off on a bartering system, we quickly – relatively speaking, anyway – moved to a money system based on precious metals, the most coveted of which was gold. It can be difficult to understand the value that modern people place on gold without first understanding the history of gold as money.
Sometimes in this world of debt and money troubles, the barter system seems like a good idea. You simply settle in an area where different people have different jobs – rather like Plato’s ideal city in The Republic – and you all trade to get what you want. The problem with this, though, is that it isn’t always possible to do an even trade.
Say, for instance, that you’re a shoemaker, and you need some grain to make food for your family. You can trade the grain farmer a pair of shoes for a bushel of wheat, but you can’t make his shoes until you get the leather to do so. This wouldn’t be a problem except that the cow herder won’t slaughter his cows for another two months. You can’t wait that long for food, so what do you do? You resort to money.
Ever since people have figured out the use and rarity of various precious metals, they’ve been used as a form of money. At first, the type of money minted from these metals was crude and unregulated. Different cities had their own currencies, which made traveling very annoying. Eventually, though, all countries caught on to the fact that having a standard currency system was a good idea, so the barter system faded out, and currency became more regulated.
From there, though, people figured out that printed paper money might be a good idea. However, money had to be representative of something, since no one would see any inherent value in a piece of printed paper. Thus was born the gold standard system, where nations traded with one another based on their gold stocks.
Now, the gold standard has been dropped, when many people argue wrecks the stability of the dollar. This is why many people continue to invest in gold, which can still be used as currency in many countries around the world.