Lecture 3 - Making Money..docx

Lecture 3 - Making Money..docx - Reading Frederic Pryor The...

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Lecture 3 - Origin of Money Reading: Frederic Pryor, “The Origins of Money,” Journal of Money, Credit and Bank- ing. Vol. 9, No.3. (Aug. 1977), pp.391-409. 1. Barter - Trade (theory of economics) Barter  - direct exchange of goods without a medium of exchange Limitations of Barter : 1. “Double Coincidence of Wants” 2. No common measure of value 3. Indivisibility of Certain Goods 4. Lack of standard for deferring payments 5. Hard to store wealth 6. High transaction cost 7. Slows down overall growth How to go from barter to money? 1. specialization 2. stockpiling 3. less trust 4. started with currency of easily traded commodity goods like skins and salt 5. then led to more symbolic forms of currency, “money economy” - First money used in  Mesopotamia  in  2500 BCE -  Cowrie Shells  were the longest running form of currency in Africa Key Points:
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