WHAT IS TRANSACTION MONEY?

Money used in transactions consists of

STOP...this blog is ending because I can no longer download images off of my computer. I will be moving to another format to be determined later.

The trillion dollar coin

According to Luca Pacioli, a debt is equal to a credit and vice versa. If you owe someone $10 then you have a $10 debt and that person has a $10 credit. Money represents the connection between them. Therefore, debt + credit equals money. It's an easy concept to grasp, but one that is incredibly misunderstood. Throughout the debate about the public debt, only the debt is mentioned with no reference to the application of credit and money that has been created.

 

During the early 17th Century, Sweden was rich in copper wealth, producing as much as two-thirds of Europe's copper needs.

In 1644, Sweden started using copper plate money. A 40 pound copper plate was the equivalent of ten dalars worth of silver. The shortcomings of this system are obvious though. The heavy plates were bulky and inconvenient. They were replaced by "certificates" that were exchangeable for an equivalent copper value. The certificates were never considered legal tender in Sweden, but they led to the creation of the first European bank notes.

The first European paper money experiment

Bank notes are considered paper money, but there are other forms of paper money. The first European bank notes were created in 1661 by the Stockholms Banco in Sweden. The bank was founded in 1657 by Johan W. Palmstruch.

This bank note is dated 1666. Palmstruch engaged in dishonest accounting practices and created more bank notes than he could account for. The bank collapsed in 1668.
 

Palmstruch was arrested and imprisoned for "dishonest accounting." The father of European paper money died in prison in 1671. 

The first paper money

The first known paper money put into widespread circulation was created by the Tang Dynasty (618-907 A.D.) in China.

 

 

This 1380 Kuan note was made in China and is the oldest known bank note in existence. By 1455, after about 600 years, China abandoned its paper money experiment mainly due to hyperinflation. So many paper notes were created that they became utterly worthless.

The first coins

The first known coins were created by the Lydians around 600 years B.C. Lydia was located on the Southern coast of Asia Minor (Turkey) approximately half-way between Mesopotamia and Greece.
The first coins were made of electrum--an alloy of gold and silver. Each coin was hand engraved. They weigh about the same as a Washington quarter. The Lydians developed the 24 carat system of value and are believed to have established the first permanent retail shops. They were conquered by Alexander the Great and the Persian Empire. Much of what is known about this ancient society comes from the Greek historian, Herodotus.