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#03 History Of Money


On tis podcast I will talk a lot about Financial Litarecy and well being. Bu the first is ofcourse let me share my learnings about the money starting from the history the first coins till the current recession gossips in 2023;

Starting from the first tradings in Ancient Egypt to Paper money invented by Kublai Khan, The beef between Gold and The Dollar. Aka The Nixon Shock to the economic crisis and finally the failure of The Silicon Valley Bank.

Spoiler, while listening I hope you don’t lose faith in humans, because while researching I really questioned many times the humanity. But ok there is always faith, and without knowing and understanding the system you can not secure yourself right. So let’s start with this weeks thinkwork.


History Of Money

Well to understand money, we should take a look at the history of money. How is the first money found and before money how did humans trade?

Before money was invented,  humans traded basically by bartering. Bartening is a method to trade goods or services. The first tradings are referring to 900 BC, Egypt. It became very common  in ancient societies like Mesopotamia, China, and Greece.  the economoy was direclt based to crops and livestock back then so farmers would exchange their surplus crops for goods such as livestock, textiles, tools or service.  For instance we have this skilled hunter Nebamun  and a carpenter Senusret. Senusret the carpenter will go up to Nebamun the hunter and say “ ayo Nebamun,  There is this bear endangering my familiy, I know you are the best hunter in this town. If you kill this bear I’ll give you 3 sacks of rice and I’ll make a nice carpet for you.”  This system was perfect for that  as it was based on  the demands that directly linked to continue basic needs in life. With the passing of time and the growing of the global economy, problem started to occur: there was no standardized value in the goods. The values were determined case-by-case. It was also hard to find a trade with mutual benefits. So what did the human. “Well let’s invent something that will act like an universal accepted measure of value so we can have a more efficient economy.” AKA money. Did the founding of money end the ancient bartering? No. During economic downturns, it is recorded that people turn back to bartering . In situations like short supply ( people selling toilet paper, does this sound familiar?) but also highly devalued money through hyperinflation. Taking the the ongoing crisis in Venezuala as example bank notes are so devaluated that is literally  thrown on the streets. Also during the 2008 economic crisis bartering became popular again. But will take about the economic crisis  in a few minutes.

First coins

So 300 years later, the first coins were found by the  to the Lydians, current west-Turkiye. Minting means the creation process of coins. Th Lydia's King Alyattes minted what is believed to be the first official currency. The coins were made from mix of gold and Silver. Archeologist found and are still finding many coins dated to the lydians.  The coins beautifully engraved with tigers motifs. I’ll add a post some picture on Insta. So since and ppby way more than 2600 years ago gold and silver the  XXXXX are highly valuable. Gold was a sign of justice and value XXXXXXXXXXXXX  Why did I felt the urge to say this, well Gold had and still has a huge impact on the modern day Economy.  But unfortunately we ( well act governments and politicians) changed the  this standard and trade gold in a whole other way that will lead to catastrophes in the economy.

Paper money

That’s how it is with coins. But what about the paper money? ( paper money feels so weird to say) You are ppby asking, Where does that come from, Tusem?  That is thanks to our guy Kublai Khan, the founder of the Yuan dynasty in China in the 13th century. The reason? Because China at the time, was empire with diverse regions and various local currencies/ economic systems. So the introduction of paper money lead to solidifying the economy but also centralize his authority. But how did this unconventional form of currency come into existence? To shed light on this, let'stalk about the renowned traveler, Marco Polo.

Marco polo

According to Marco Polo, the production of paper money in China was an complex process involving the use of the bark from mulberry trees. This inner layer of bark, known as bast, was transformed into thin sheets resembling paper. These sheets were then cut into different sizes and meticulously stamped with official seals and signatures.

Marco says that the remarkable aspect of this system was the level of trust and authority placed in these pieces of paper. Each note was treated as though it were made of precious metal, and forgery was met with severe consequences, including death.

So this paper money invention China during Kublai Khan's reign, was a bold and innovative step that unified the economy and facilitated trade on a scale never seen before. People trusted these government signed papers and (also kinda had to 😊). Paper money was one of the biggest inventions of human history thinking about its lasting impact on our modern financial systems.   The spanish peseta portugese escudo, the British pond was once the greatest currencies of all time. Now it is Dollar. But the american dollar is in a kinda sketchy situation. Why?  Well I call it because of the toxic relationship with Gold. Looking at he passed millenia we humans suffered  a lot because of this toxic relationship. My dearest friend gold was tried to be cancelled many times. Let’s go a bit further in time centuries to the 70’s so I can I expleain you why.

The Gold Standard

Before the current system America (fractional Reseve system)  had this financial system called “Bretton Woods system”.  Countries in Europe followed this system as well. This system had basically a Gold standard. Under this system, countries could exchange their US dollars directly for gold at a fixed rate of $35 per ounce.

For example, if someone held $1,000, they couldrequest the conversion into gold. Which is approxiamtly 28.57 ounces of gold (considering the fixed rate of $35 per ounce). You physically receive the gold in the form of gold bars or coins, representing the value of their US dollars.  So under the gold standard we understand that a country's currency is directly linked to a specified amount of gold.  Under this rule, printing of paper money was permitted based on the amount of gold a country had in its reserves. 

But why did countries is this the gold standard abandoned? Well Looking at the current system which some economist call “Purely Fiat Currency Regime”, the economy  operates solely on fiat currency. This means that the value of the currency is not tied to a specific commodity like gold or silver. Instead, it is determined by government regulation, monetary policy, and market forces.

The abandonment of the gold standard was no silent. It was a Scandal; It is kown as the Nixon shock. I learned about this during a bitcoin bootcamp event. The instructor said that the Nixon shock is not really talked about. Because it is is actually a scandal. I think it says a lot about the human greed.  At the end of the event I rolled down the stairs and twisted my ankle. I got a blackout. I had to drove myself to the hospital afterwards.  But anyways Let me spill the tea about this Nixon Shock😊

Nixon Shock

So as a said, with the gold standard, America  was allowed only to print paper money based on the amount of the gold  America had. Many countries had millions of dollars in their banks because they trusted that America would keep follow this rule. So they invested in the US dollar. But in 1965 the president of France Charles de Gualle, got a bad feeling about this. He send the French Navy to the American shores and demanding  the exchange of gold at the official exchange rate. Other countries followed him and demanded their gold.

The seems America had printed too much Money then the actual gold they had in reserve. America faced hardships to pay France,Switzerland, Germany…. All these countries back. Germany decided to leave the Bretton woods system. And other countries followed. But America has not enough gold in its reserve to pay all the countries back. This made The great US dollar drop against the European currencies. It was not looking good for America at all. In 1971 President Richard Nixon announced the exiting the Bretton Woods system thus  the convertibility of the US dollar into gold, effectively abandoning the gold standard and transitioning to a fully fiat currency system.

-Nixon Ses Kaydi-

 It came Like a shockwave in the whole world. Because first time in the human history. Because since ancient egyptioans, Ancient China till quite recently there was this fair evaluation of paper money based a valuable recource that is in scarcity.  So now the US dollar and other major currencies were not tied to the gold but the government regulation, monetary policy, and market forces.  But now In the current fiat currency system, the value of money is determined by factors such as supply and demand, monetary policies, economic conditions, and market confidence. The value of fiat currency, like the US dollar, is based on the trust and faith that people have in the stability and credibility of the issuing government and its central bank. The thing is everyone including president Nixon’s friends thought this was a temporary  precaution. Just to save the USD. But today it seems impossible to go back to the gold system  because the whole system is now out of the rails of justice.


The economist Rick Rule says: he gold standard wouldn’t work today because the political class doesn’t want any part of the system that constraints their power.


There is this turkish expression “Dunya’nin çvisisi çikmis” which means the world is out of joint. It is corrupted.  Speaking about corruption. We’re done here. Let’s go to the famous year 2008.

Economic Crisis 2008


The cause of the economic crisis in 2008 is mainly seen as the Credit Default Swaps CDO’s and CDS’s.  I don’t want to get to technically but we have to understand some concepts first.

During the 9O’s, CDO’s Collateral Debt Obligation was a new financial product that banks offered. It can be compared to a bucket that contains other little buckets that contains a mix of mortgages, loans, or bonds. All these little buckets were then tagged by their risk rate. least risky and have the lowest returns, while the buckets  with the lowest credit rating are the most risky but offer higher returns. These buckets were then sold to investors. 

In simple terms, banks make money by lending money to people and charging interest on the loans. When banks sell loans to other investors through CDOs, they receive cash in exchange for the loans, which they can then use to make new loans and earn more interest. This also helps banks to manage their risk by transferring some of the risk of default to the investors who buy the CDOs.

Derrivatives and CDS’s

CDS’s on the other hand is like insurance against the possibility that someone will not be able to pay back the money they borrowed. If the borrower defaults, the CDS buyer gets paid by the seller. CDSs can be used to reduce risk or to bet on whether a borrower or company will be able to pay back their debts.

 Derivatives were able to escape regulations because they were considered as financial instruments that facilitated risk management. As they were not directly traded in public markets, they were not subject to the same regulatory oversight as other securities. Additionally, some of the key players in the derivatives market were very powerful and well-connected, making it difficult for regulators to impose rules on them. The lack of regulation allowed for the growth of the derivatives market, which eventually contributed to the 2008 financial crisis.

CDO’s and CDS’s were a huge innovation in Wall Street. Bankers Loved this. But xxxx ONE OF jp MORGAN GOLLAB DERRIVATES GROUP PARTNERS SAYS THAT not everyone understood the risk of these derrivatives.

Leach-Bliley Act in 1999

İn 1999  Bill Clinton signed the act Called Leach Billey act. With this act Bankd could move more freely. It allowed banks to merge and engage in a wider range of financial activities. It was to create an innovative environment fort he financial industry.  CDO’s and CDS’s were also in favour from this act. The government did not really understand these  complex financial products and saw them just as risk management products. But were there Really? 

As a result these derivatives were as regulates as before, financial institutions like banks had more freedom in how they used them. There was a lack of oversight allowing increased risk-taking and the creation of complex financial products. Like Synthetic CDS.  it also made it harder for regulators to monitor and control the potential dangers associated with these derivatives.

Housing market skyrocketed

So thanks to the freedom from the act that Bill Clinton signed, banks started  to sell mortgages like bread. ( mortgages with adjustable rates). So Americans saw this as opportunity to get a loan and buy a house. So basic economcs what happens if demand increases? Prices rise. That happend to the housing.

So when the house prices skyrocketted, people had to default on their mortgaes aka were inable to pay their mortages. If you remember what I told you about CDO’s. CDO’s were finanical products. A CDO consists other fininacial products such as loans and mortages, all ranked by risk and sold to investors. So when the people started to default on their mortages, the investors of CDO’s got huge losses. The housing market litarlly crashed. And there you have it the economic crisis.


So my question to you, do you think CDO’s and CDS’s are still ebing used (after being behind the economic crisis),

Goldman Sachs selling toxic CDO’s

House market crash          


Recession 2023?

What about know? Quite recently with the pandemic we saw that the interest rates were really low. This was to make te economy sparkle and so that people get loans an buy stuff. But when everyone got loans. This lead to unhealthy lending and borrowing of money. People had higher buy force but what happens when buy power rise, the prices will get higjer too. AKA Inflation on Supermarkets, clothes, houses, rents… everything got more expensive.  You ppby already know that quite recently huge banks Like The silicon Valley bank failed some other banks Like Signature banks followed.


Silicon Valley Bank

Silicon Valley is the bank were Mostly Start-ups in Silicon Valley store their money they got from their investors. Silicon Valley Bank had an expertise in the Tech industry and had good portfolio of products they offered to starups.

During the zero interest Rate policy Silicon valley bought billions of dollars in bonds at a fixed interest rate.During zero interest, Silicon valley bought billions of dollars in bonds at a fixed interest rate. (basically lending the government startup money. These are considered safe investments with low returns. In reterun gov will pay you bach over a specific period with the interest.

So while the U.S. government agrees to pay a fixed interest rate on its bonds, the Federal Reserve can influence interest rates in the economy, which can affect the demand for and prices of bonds.

But post corona) the Federal Reserve of America increased the interest  the value of the government bonds they purchased became less valuable. -> made the value of the bonds old bonds decline (new bonds where with higher interest rate.

The tech companies investments (in silicon bank) declined I value so they started to pump in in money. -> made it hard to raise capital-> Thousands of people got Layed Off in Tech Giants Like Facebook, LinkedIn….

When the stock prices of these tech giants began to fall, people started to panic and everyone wanted their money back. So the silicon valley bank had to sell the bonds they bought during the pandemic to a much lower price in order to pay their clients back. This created a mirror effect start-ups thought that they hadn’t any money so more people go to the svb and withdrw their money which eventually made them collapse.

So now with the inflation going on, the layoffs happening in tech everyone talks about a recession, an economic downturn. We are indeed in turnulent times. As you now know we cannot really trust government or banks because looking at the history people suffered and still suffered a lot.

When I did my research  about money for this episode, I realizied it all abut the long run. You never win directly money. You have to make your money work for you. Put it in the system lending it that’s the only way. We basically put our money in de spaarrekening. When we leave that money.  Banks are making that money worl for you.  We get our salary in Euro or dollars which is send to our bancaccounts. For instance you saved lot of money in your bancaccount. You cannot not just walk in the bank and ask top There is a limit to the amount of money you want to withdraw. Because the money is basically not there. It lend to someone or an organisation. Banks make money in this way. Lookin at our example of silicon Valley the maximum amount of Money that was guaranteed was 250k dollars.



So As I said in the, In the Thinkwork Podcast beginning, I will talk a lot about Money. The next step is actually talk about our own financial Literacy and well being. I’ll be thinking about Gold, Bitcoin and stocks. The thing is these topics are new for me. So in order to have a solid understanding of investing. I’ll invite guests over from the financial industry that will clear out this complex topic. What do you want me to cover? Let me know via the Thinkowrk podcast Instagram?

Ok what about Next week? Next I’m going to talk about Malcolm X!So if you are interested or if you  too got any value from this episode please follow me from whatever platform you are listening from.

 In any case, I really enjoyed creating and researching this podcast. (although there were some moments were I llost faith in humanity 😊) I wish you all financial literacy and well-being. Next week I’ll be back with more thinkwork. SELLAMAA



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