Author: Mwangi Waithaka

In the previous article, we discussed the establishment of The Gold Standard. Gold and silver have served as the primary currencies for approximately five thousand years. However, it wasn’t until around 680 BC to 630 BC that they began to function as money. In Lydia, gold and silver were transformed into coins. These coins had the same size and weight, making them interchangeable. This quality is known as being fungible. This development allowed them to function as a unit of account and a standard of measurement. Goods or services were priced in terms of a certain number of these gold…

In the last discussion, we covered how central banks evolved as a way to address the issues that arise when using paper money in an economy. However, to gain trust in the concept of using paper money, many individuals felt that another measure was needed. Hence, there was the implementation of the Gold Standard. What is The Gold Standard A gold standard is a monetary system where the value of the currency is based on a certain amount of gold. Paper currency was supported or backed by gold. A country’s currency had a value directly linked to the value of…

In the previous article, we discussed how central banks create money. However, it’s important to note that commercial banks also have the ability to create money as well. Let’s explore how they do it. When you take a loan from a bank to buy something like a house, car, or TV, the bank actually creates new money out of nothing to lend you. And the catch is, you still have to pay interest on that loan. The former governor of the Central Bank of Canada, Graham Towers stated that “Each and every time a bank makes a loan, new credit…

This article will explain the mechanism through which central banks create currency. Previously, we discussed why a central bank was created and the idea of fractional reserve banking. In 1694, after years of war and exhaustion, the English government needed financial support for its political endeavors. To address this, Scottish banker William Paterson came up with an idea for a privately owned bank that could create money for the government. This marked the birth of the world’s first modern central banking system. Central banking has a greater impact on society than laws, governments, and politicians, yet it is often overlooked…

In this article, we will discuss two main topics. One is about why a central bank was created and the other is the idea of fractional reserve banking. But first, let us do a recap of the previous article where we learned about paper money and the emergence of banknotes. In a nutshell, in the year 1640 in England, the relatively disliked King Charles was experiencing financial difficulty. He was deeply in debt. So to get money, he not only seized the money in mint but was also claimed as one of his notorious forced loans. The money in the…

Paper money has an intriguing history. To start off, we’ll summarize what the previous article was about. We had learnt about the history of metal money. In brief, round-shaped metal coins that were made of bronze appeared in China around 770 BC. The value of each coin was determined based on the metal it was made of. This made it easy to measure and verify the value of the coin. In 600 BC, Alyattes, who was the King of Lydia, established the very first government-controlled factory, a money mint for producing money. He made the coins by combining silver and…

Money is considered one of the most significant creations ever made. Nevertheless, money differs from other great inventions of people in that it is not physical. This is why it is not naturally associated with inventions like fire or the wheel, that have a physical presence. Money is simply a concept, an idea, an illusion, or a perception that has no inherent value but is determined solely by the importance we assign to it, at least money as we know it today. Nevertheless, that money is an illusion does not in any way minimize its value. Earlier, before the concept…

Money is a collective belief system grounded in trust. Money is the greatest trust system devised by humans. Society collectively assigns value to certain things like money. Most of these things are pieces of paper bearing a president’s image in green, blue, or red. They are considered equivalent to the number printed on them. Items deemed to be of equal worth, are exchanged for these paper notes. If your bike is valued at $90 and another person agrees, they will pay you $90 to buy it from you. The concept of value is subjective and not fixed. It is entirely…

Money is a means to exchange time. It’s as a holding tank for your financial resources until you’re ready to use them. However and genuine monеy has been denied to everyone, and they have been duped into believing that currency is real. This dishonest imposter is steadily taking away your two most precious possessions, your time and your freedom. Your true wealth is your health, time, and freedom. I will begin my piece with a quotation. Henry Ford once said, “It is well enough that the people of the nation do not understand our banking and monetary systems, for if…

Scams are attempts to defraud you or others to get your money, sensitive information, or other valuable assets after first gaining your trust. Scams exploit victims using a combination of the victim’s credulity, naïveté, compassion, vanity, confidence, irresponsibility, and greed. A scam is also known as a con, confidence trick, fraud or swindler. A person who scams people is a scammer. This is a clever person who creates and uses cunning methods and tactics to deceive, confuse and exploit their targets (persons or organizations) into giving them money, personal details, or other valuable possessions. Such people are also called con…