Chapter 1 of ascent of money
Basically what this chapter talks mainly about is the evolution of money. Its evident
that Ferguson discusses the change in money throughout the years.
Money starts with trading commodities, then moves onto coins of bronze, silver and
gold, and then it moves into nothing, mere numbers on a screen. Personally I find it
fascinating as I always wondered to myself what is money now? How valuable is a
paper. How valuable are numbers on a screen? What’s the history of all of this?
In this chapter he talked about how the Inca empire, which was moneyless and
appreciated the aesthetic qualities of rare metals. They called gold” sweat of the sun”
and silver was “tears of the moon” . Also he mentions how the communists also used
humans as currency. They were both moneyless in a sense as they relied on human
trades as a form of currency.
The chapter begins with Ferguson talking about coins and how they were used as a
form of currency by the romans Chinese and Greeks. For some there was a shortage
of silver coins but this was solved as a result of the rich silver mines in Lima, Potosí.
As a result of the rapid demand in silver coins, inflation occurred in Europe.
Something important that summarizes his point is when he says “ money is worth
only what someone else if willing to give you for it and that an increase in supply will
not make the society richer rather it would enrich the government that monopolizes
the production of the money.
He also states in the book is that money is based on belief. On page 31 he says that
money is matter of belief and could be called faith. As you have to believe in the
person paying you and believe in the person that’s issuing the money . its all based on
this plateau of faith .without it , there would be no mechanisms