What is money?

10 posts


Probably the most important question of economics.

What do you think makes money money?

Team Zissou

Universal demand.

Well, there's also universal demand for air. Or food.

It's the most vendable good.

But what makes it the most vendable good?

My point being, right now we are discussing the consequence of money already in existence, i.e. universal demand, the most vendable, the best storage of value, the measure of value, tc.

But how does this specific money come to be?


Money emerges as a result of exchanges. We've also seen money by fiat, which usually gains value through a combination of force and limited supply.
Bob Dylan Roof

It seems that fungibility is necessary

Bronze Age Pervert

I don't know a lot about the rise of currency as such, but quite a bit is known about where and why the first coins were minted. Before that, currency was difficult to use and consisted of things like iron bars, etc.; but some time in the 8th century BC Lydian and Greek tyrants had need of highly skilled mercenary fighters. Hoplites, heavily armored and with heavy weaponry, were initially mercenaries and not, as Hanson or Aristotle claim, a development of the middle class deciding to fight as a phalanx. The phalanx structure came later, but the hoplite developed first as a mercenary/pirate, and many found work in the bodyguards of tyrants, or to help aspiring tyrants take over a city. There is some interesting and for me convincing evidence that the first coins, of electrum, were minted to pay such fighters, who were very expensive and interested in taking a standard and valuable payment for their services.

There is also possibility that coins were used for high-class rentboys and hetairas, but that is not known. I will charge no less than $500/hr though, I deserve it!


I bought Adam Smith's "The Invisible Hand" at the train station today. I might be able to weigh in in a couple of months.