Money 101

What is Money?

Money is an agreement

The agreement may be voluntary or coerced, conscious or unconscious, and may fluctuate with time or remain fixed.

within a community

All kinds of communities – large and small; local, national, international, or virtual; cooperative or competitive – may create such an agreement.

to use something as a medium of exchange.

The money itself can be issued en masse by a central authority or created ad hoc by two consenting parties in a mutual credit system; it may store value or merely mark transactions; it may be backed or valued with something tangible or merely by the issuing authority; and it may take any shape – coins and bills, some chalk marks on a blackboard, or bits of data inside a computer.

[I'm posting this definition by the people at transaction.net that I got from omar who left a comment on this.

Related posts here, here and here.

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Here you'll find a three part video: The Money Masters. It's well worth watching, even if only the first half hour of part I."

At the top is an image of King Henry the First's tally stick:

THE TALLY STICKS (1100-1854) King Henry the First produced sticks of polished wood, with notches cut along one edge to signify the denominations. The stick was then split full length so each piece still had a record of the notches.

The King kept one half for proof against counterfeiting, and then spent the other half into the market place where it would continue to circulate as money.

Because only Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which gave people confidence to accept these as money.

He could have used anything really, so long as the people agreed it had value, and his willingness to accept these sticks as legal tender made it easy for the people to agree. Money is only as valuable as peoples faith in it, and without that faith even today's money is just paper.

The tally stick system worked really well for 726 years. It was the most successful form of currency in recent history and the British Empire was actually built under the Tally Stick system, but how is it that most of us are not aware of its existence?

Perhaps the fact that in 1694 the Bank of England at its formation attacked the Tally Stick System gives us a clue as to why most of us have never heard of them. They realised it was money outside the power of the money changers, (the very thing King Henry had intended).

More on this here and here.]