Money

Money and Values and Standardization

Value

• Starbucks example:
  • creates competitive advantage through branding
  • creates value by establishing its own standards:
    • small = "tall"
    • medium = "grande"
    • large = "vente"
    • and charges more for its unique standard
    • same in all Starbucks

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• notes to do

Money & trade

trade = geography movement scarcity/surplus technology technological and cultural diffusion

History of money

“I understand the history of money. When I get some, it's soon history.”

What must money be?

- Money must be scarce - Money must be transportable >>Micronesia currency of large limestone coins...9-12ft diameter, several tons... put them outside the houses.. great prestige... but they weren’t transportable, so tokens were created to represent them, or parts of them... Tokens = promises - Money must be authentic (not easily counterfeited) - Money must be trusted >>government sanction >>language/ writing - Money must be permanent (fruit and goats die...) problem with barter.. perishability

“Money can be anything that the parties agree is tradable” (Wikipedia)

Early monetary systems: 75,000 bc ... shells >>scarce and rare cattle crops/ herbs/ spices... specialty crops >>see definitions above, what money must be) Early civilization: spices = currency (crops, esp. pepper) gems, gold, rare minerals Early Discovery Age: Rum became a currency (more stable than gold) In prisons, cigarettes become currency

History of Coinage: starts with the “Touchstone” ... touchstone...rub against it to measure purity (trust, value)

Phoenicians: created currency Representative Money: paper money = coin value Fiat money = back by a promise only

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Links & Resources

• The History of Money by NOVA