I often think about the fact that the objects we use to represent currency have no actual practical utility outside of their representation of “money”. But why did we begin using this system in place of exchanging good and services with one another? At what point did humans see fit that rounded metals and rectangular sheets of paper had an assigned representation of value that could be exchanged for goods and services?
In: Economics
Let’s say that you repair roofs for a living. You go around your village repairing roofs, and people pay you in food, which you then use to feed your family. Simple enough.
But there’ll come a point at which the people growing food don’t need any roof repair. What do you do then?
The problem with barter systems is that they assume that everyone has something that someone else wants, and that’s simply not the case. Money certainly isn’t a perfect solution, but it ensures that people with more niche specialties are able to particular in trade.
Tl;dr bartering runs into the problem of people not needing what you’re bartering. Money solves this by acting as a labor credit.
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