Dad, what's the old story?
Near universal is the story of money it isn’t perfect but it does three things it is a system of accounting. The earliest recorded writing was a ledger or account book for how much beer you were owed as a worker based on how much barely you collected for the king in ancient Macedonia. It was one central ledger held by the king and his accountants.
Money besides being a system of account has to be a medium of exchange in really small groups sharing and barter work well but in larger groups if you have a lot of bananas but want a cowhide but not bananas money sorts out the equilibrium of wants but setting a price for exchange since your bananas are not wanted here. This is the beginning of markets some bartering is good but a barter implies the double equilibrium of wants (both people want, what the other has on offer). Money is a simpler medium of exchange than barter.
Money third must represent a store of value it retains the ability to buy things next week at the market.
What types of money were used before writing, coins and kings? Many almost anything like shells, knots in rope for the Inca people in South America, and huge stones in the Pacific islands (probably doubled as ship mooring positions) but people found a way to trade and store money as quickly as they told the story about rules of who was eating when food was short or they had not done the work. Some say it is an organising characteristic of human cultures it emerged in many shapes, sizes and varieties.
Some of the ancient money survives today the first had a king's head stamped on a coin why did people use the coin with the king's head if they had already made up their own money? Did the king have a good story about him being descended from the stars, gods or whatnot or the army and taxes? The easiest way to enforce the use of money would be to pay people with money and then demand some of it back each year in taxes, to generate circulating money backed by the power or force of the king. State-sanctioned violence is still a major story of police and armies used and told today. Most countries don’t have debtors’ prisons but alternately if the penalty for a crime is a fine then it is only a law the poor humans.
GOLD is relatively abundant compared to more useful metals and easier to isolate from surrounding rock. Gold has very little industrial use outside of semiconductors it is heavy, soft at normal temperatures easily fashioned or broken with stone or steel tools and has a low melting point. Gold however tells a good story of jewellery and riches. Hence it became an easy metal to use for coins. It became the international standard and gained dominance in the east-west trade and often was used as the preferred medium until the US no longer held the dollar to gold in the 1913 Federal Reserve Act whereby 1 USD would have at least 40% backing in Gold until 1971 when then President Nixon fully removed the gold standard returning the USD to FIAT currency (whole $ backed by the power of the US military to say it is worth something).
FIAT money US dollars or NZ dollars are debts the banks and government guarantee to pay, much of which now is just transferred digitally from companies to employees, taxpayers to tax collectors well everyone. The custodial layer of the banks and the added security of not losing your cash or gold or forbidding someone from stealing it from you are all added bonuses. Banks, Governments and modern employers are responsible for double entry accounting or a centralized ledger that tracks incoming and outgoing funds or having “matching books” tracking where the money was earned and spent to pay adequate taxes and pass profits on to shareholders, investors etc… this has been the international standard since around 1299 in Europe.
Blockchain-enabled decentralized ledger accounting with the invention of Bitcoin the first cryptocurrency in 2009. The blocks opened in 2009 and blocks of new Bitcoins are added daily until 2140 as the supply of new coins is reduced every 4 years until all 21 million bitcoins are supplied. This is a forced digital scarcity and in theory, would be a store of value if others agree and the internet and power grid still function. It has not become a useful medium of exchange as its dollar value has high volatility and is hovering around all-time highs in March 2024 of USD 72,000. The technology of a decentralized ledger provides significantly more transparency about transactions. Private banks have allowed governments, super wealthy and anyone with a bank account a degree of anonymity with their financial transactions.
Why do adults not want to talk to kids about money? Often times it is fear, anxiety or the stories their family told good bad or ugly about money. Money is just a tool with three functions a system of account, a medium of exchange and a store of value. This simple social fiction ties us together as humans.