The difficult life of a builder

Long time ago people didn’t buy and sell. They mostly lived in villages and made their own food and clothes. Everyone  knew how to build houses, how to grow vegetables, how to milk cows and make clothes. Life was simple.

There were people who were better at building houses, others were better at raising animals. The guy who built houses received food and clothes in exchange. However there was a problem. When the guy built a house for the shoemaker and received 50 pairs of shoes, he had to go to the farmer and exchange some shoes for food.

It was even worse when he received three cows for building a house. He had cows, he needed rice, but nobody needed a cow.

The bright idea

The builder came up with an idea. Salt was used in every house. Salt doesn’t ask for food. Salt lasts forever. When he built the next house he asked for 50 bags of salt for payment. When he needed flour, he paid with one bag of salt. Soon everybody used salt in the village. Salt was the first money, because people could sell and buy anything with it.

Salt turns into gold

What is the problem with salt? It is heavy. People didn’t have wallets, they carried salt on their backs. There was another man in the village. He made earrings from gold. He thought gold is more precious than salt. He made small gold coins. One small gold coin was worth 5 bags of salt. Now people could put their coins into wallets.

We still use coins, but they are not worth much. What can we buy for coins? Maybe a matchbox?

Paper money

It is just a piece of paper! Why are we happy to have it? Because we can buy things with it.

The first paper money was used one thousand year ago in China. Why did people need paper money? Because there were problems with gold coins. There were people who made false coins. The false coins were gold outside, but cheap iron inside. Of course, not everyone can make bank notes, only banks of the countries. What do you think? Can they make as much money as they want? What would happen if the banks made tons of money and gave it to everyone? We would end up with a lot of money, but we could not buy anything for it, soon.

Bank card

I have a bank card and I pay with it in the supermarket. The card looks the same before and after payment. I don’t know how much money I have on the card. In fact I have no money on the card. I have money in my bank. When I pay with my card,  a smart machine in the bank takes the money from my account.