What makes money valuable? Why is a piece of paper marked $10 worth more than one marked $1? You could say there is no reason. It is true that a special kind of paper is used to make dollar bills, and they are pretty, but that’s not what makes them valuable. The real reason money is valuable is that everyone believes it is.Ancient economies had no paper money or coins. Some used barter----trading one thing for another. Others used all kinds of objects as money. Any object would do, as long as there was not an unlimited amount of it. Animals or metals were popular, and so were manufactured products like jewelry or weapons. Wealth in ancient Greece was measured in tools or cattle. This kind of money had two purposes. First, it was useful in itself. Tools and cattle can be used for farming. And second, it was a way to symbolize and measure value. A house, for example, would be valued at a certain number of tools or cattle. This greatly simplified trade. Other societies used money that was totally symbolic. For instance, American Indians used wampum, which is made from seashells. And until recently on the pacific island of Yap, people use large stone discs as money. In most places these types of money died out because more practical forms of money were invented. People started using precious metals, such as gold and silver, that were easier to carry around than tools or stones. And in the eighteenth century, paper money was introduced. At first, people were suspicious of the new currency, but they came to accept it because the government or bank issuing it would exchange an equal amount of gold for the paper. A $10 bill really was worth $10 for gold. But now, people are used to the idea that the government doesn’t have to back its money with gold. Everyone believes that a $10bill is worth $10 and that is good enough. But if, for some reason, people ever lost faith in paper money, ten dollars wouldn’t be worth the paper it is printed on.

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