7 Facts You Didn't Know About Money
Image source: Pixabay
Like it or not, root of evil or ticket to paradise, money is central to our lives. We work to earn it, stockpile it for rainy days and retirement, and often wish we had more of it. But we typically don't really know too much about it. Here are some rather interesting facts you probably didn't know about money.
Image source: Pixabay.
Money can take many forms
Money doesn't always take and hasn't always taken the form of coins or paper currency. In Russia in the 1600s, for example, taxeswere paid with animal furs. Otheritems that have been used as currency for bartering include dolphin teeth, salt, peppercorns, tea, shells, knives, and arrowheads. It has been reportedthat back in 1657, the Dutch bought Staten Island for "10 boxes of shirts, 10 ells of red cloth, 30 pounds of powder, 30 pairs of socks, 2 pieces of duffel, some awls, 10 muskets, 30 kettles, 25 adzes, 10 bars of lead, 50 axes, and some knives." Even today, there is a wide range of currency. In U.S. prisons, for example, cigarettes have long been used as a kind of currency among inmates, and more recently, instant ramen soupsare being so used.
Famous Americans have played a role in our monetary history
Let's start with Paul Revere, who's not just famous for warning colonists of a British invasion. He was also a silversmith and engraver and engravedprinting plates for "Continentals," currency printed in Massachusetts to help fund the revolutionary war. After America had declared independence and the Coinage Act authorized coin currency, he provided copper that was used in it. Benjamin Franklin printedcolonial currency in Philadelphia. Thomas Jefferson, meanwhile, first suggested that we use the decimalsystem for our currency that we use today. Theodore Roosevelt oversaw the redesignof U.S. coins.
Image source: Pixabay.
The U.S. monetary system is yuuge
Our U.S. Mint producesbetween 14 billion and 20 billion circulating coins annually. Coins can circulate for about 25 years -- though if you dig through your pile of change you will likely find coins that were struck long before 1991. On the other hand, our paper money (which is really made of cottonand linen) lasts only about 18 months. In the U.S., there's about$1.4 trillion in bills in circulation.
The world's money is valued in the trillions
It has been estimated that all of the world's money, including currency, assets held in financial institutions, and so on, is equalto about $75 trillion.
Cryptocurrencies are now proliferating
We're now in the digital age where digital currencies are possible -- and exist. Bitcoins, introduced in 2009, are perhaps the best known. Cryptocurrencies use encryption for security to thwart counterfeiters. An advantage of digital currencies is that they can exist in a realm outside our mainstream financial system where we're subject to bank fees and other costs. A disadvantage is that digital currencies are virtual, not represented by physical assets, and might be hacked. Digital currencies can also be volatile, with Bitcoins, recently valued near $600apiece, having topped $1,200in late 2013.
Inflation shrinks the value of money. Image source: Pixabay.
Money can quickly become worthless -- via hyperinflation
You probably know about inflation -- the increase in prices over time -- that's typically gradual, slowly shrinking the purchasing power of a dollar. It has averaged about 3% annually in America, occasionally spiking and plunging. But in times of economic crisis, hyperinflation can occur, which can deflate the value of currency almost as quickly as popping a balloon. In Germanybetween 1922 and 1923, for example, average prices doubledevery 28 hours and had people burningmoney as kindling. In July of 1946 in Hungary, inflation averaged 207%per day. More recently, in late 2008, Zimbabwe experienced inflation of about 98% daily andended up issuing a $100 trillion bill. Zimbabwe isn't out of the woodsyet, and now Venezuela is sufferingfrom hyperinflation.
Money can grow faster than you think
Yeah, yeah, yeah. You've heard it lots of times -- save and invest your money for your future. But you may not appreciate just how effective and life-changing doing so can be. Check out the following table to see how saving and investing various sums annually can grow into big nest eggs over time (assuming an 8% average annual gain):
If you're still many years from retirement, you can amass more than a million dollars in a 403(b) account without even making the maximum allowed contribution.
There are many more interesting things to learn about money. If you're so inclined, spend some time poking around online at the websites of the U.S. Bureau of Engraving and Printing, the U.S. Mint, and the Federal Reserve.
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