What is Money?

Money, like fire and the wheel, has been around for a very long time.

No one knows for sure how long or what the origins of money are. The first instances of money were objects with intrinsic value. This is called commodity money and includes any commonly-available commodity that has intrinsic value.

An incredible array of items have served as money – wampum (beads made from shells) were used by North American Indians; cowries (brightly coloured shells) were used in India; whales’ teeth were used in Fiji; large stone disks were used in the Pacific island of Yap; cigarettes and liquor have been used in more modern times; tobacco was used by early American colonists; throughout the colonies, gunpowder and bullets were frequently used for small change; the first paper money issued by the federal government consisted of $10 million worth of “greenbacks,” printed in 1861 to finance the Civil War; even cakes of salt have served as money in Ethiopia, Africa, and Tibet. The Roman army was paid in salt – an allowance called salarium (which is the origin of the word salary). The first known example of paper money occurred in China during the Ming dynasty (1368 – 1399 A.D.). This form of money was also used extensively throughout Europe in the Middle Ages.

Sophocles [`sOfəkli:z], the ancient Greek playwright, had very strong opinions about the role of money. As he saw it, “Of evils upon earth, the worst is money.” It is money that sacks cities, and drives men forth from hearth and home; warps and seduces native intelligence, and breeds a habit of dishonesty.”

In modern times, people may still be seduced by the lure of money and fashion their lives around its pursuit. Nevertheless, it is hard to imagine an economy functioning without money. Money affects not only morals and ideals, but also the way an economy works.

What is money? Money isn’t exactly what we think it is. Much confusion exits about money and currency. This confusion makes some experts claim that there is no money at all.

People do distinguish between “cash” and “money,” and for good reason. There are really three types of money: hard money, soft money and no-money.

Hard money, if there were any, would be gold, silver, or platinum. These are the noble metals and are called hard money because they are hard assets with real universal value.

Soft money would be paper money backed by hard money. This would include silver or gold certificates which were backed by silver or gold. We do not use hard or soft money anymore.

The third type of money is no-money. That is paper money backed by nothing of value. This is also called fiat money. Really it is not money at all, it is currency. Currency can take many forms. It is anything accepted as a medium of exchange. The currency of the United States, for example, is the Federal Reserve Note which is backed by nothing of value.

Fiat money is an intrinsically worthless (or almost worthless) commodity that serves the functions of money. The term fiat means by government order. People are willing to accept fiat money in exchange for the goods and services they sell only because they know it will be honoured when they go to buy goods and services. The bills and coins that we use today – collectively known as currency – are examples of fiat money. Because of the creation of fiat money, people are willing to accept a piece of paper with a special watermark, printed in ink, and worth not more than a few cents as a commodity, in exchange for expensive goods and services.

Vocabulary notes:

1. instance [`ın^tst ə n^ts] – приклад; випадок; зразок; окремий факт;

2. intrinsic value [ın`trın^tsık] – дійсна (реальна) вартість; внутрішня вартість; внутрішня цінність; притаманне значення;

3. commodity money [kə`mOdəti] / [kə`mα:dəti] – товарні гроші;

4. array [ə`reı] – велика кількість, безліч, сила-силенна, сукупність;

5. wampum [`wOmpəm] / [`wα:mpəm] – намисто з черепашок (у індіанців);

6. cowries [`kau^əriz] – каурі (мушля, що замінювала гроші в окремих частинах Азії та Африки);

7. gunpowder [`gAnֽpaudə] – порох;

8. “greenbacks” [`gri:nbæk] – “грінбеки” (“зелені спинки”) – не забезпечені золотом паперові гроші, які випускалися для фінансування Громадянської війни за рішенням Конгресу від 25 лютого 1862 р.;

9. salarium [sal`arium] – соляний пайок (який видавався військово-службовцям та цивільним чиновникам); оклад, утримання;

10. allowance [ə`la u ən^ts] – утримання (річне, місячне і т.д.); кишенькові гроші (на повсякденні дрібні витрати);

11. to sack cities – грабувати, віддавати на пограбування (захоплені міста);

12. hearth [hα:θ] / [hα:rθ] – дім; домашнє вогнище;

13. to warp [wO:p] / [wO:rp] – перекручувати, спотворювати;

14. to seduce [sı`dju:s] / [sı`du:s] – спокушати, зваблювати;

15. native intelligence [`neıtıv ın`telıG ə n^ts] – вроджений, природний інтелект;

16. to breed [bri:d] – породжувати; спричинювати;

17. lure [ljuə] / [lu^ər] – спокуса; спокусливість;

18. to fashion [`fæ∫^ən] – надавати вигляду (форми); утворювати, робити; формувати, моделювати; змінювати, перетворювати; пристосовувати;

19. pursuit [pə`sju:t] / [p<sup>ə</sup>r`su:t] – переслідування, гонитва; прагнення, пошуки;

20. currency [`kAr ə n^tsi] – грошовий обіг; валюта, гроші;

21. to distinguish (between) [dı`stıŋgwı∫] – розрізняти; побачити, помітити; відрізняти(ся), відзначати(ся);

22. for good reason [`ri:z^ən] – небезпідставно; обґрунтовано; з вагомих (поважних) причин;

23. hard money – металічні гроші, монети; готівка; дзвінка монета;

24. soft money – паперові гроші; дармові гроші;

25. no-money – несправжні гроші, “не гроші”;

26. noble metal [`nəub<sup>ə</sup>l `met^əl] – благородний метал;

27. fiat money [`fi:æt `mAni] – паперові гроші (не забезпечені золотом); нерозмінні (декретні) гроші;

28. intrinsically worthless [ın`trın<sup>t</sup>sık<sup>ə</sup>li `wə:θləs] – по суті нічого не вартий (нікчемний);

29. to honour [`Onə] / [`α:n^ər] – оплатити (чек, тратту); виконати (зобов’язання);

30. bill – амер. банкнота;

31. watermark [`wO:təmα:k] / [`wO:t^ərmα:rk] – водяний знак (на папері).

Task 13. Agree or disagree with the following statements.

1. The word “money” is of Greek origin.

2. The origin of money is closely connected with creating the wheel.

3. The first instances of money were intrinsically worthless objects.

4. Commodity money can be of various kinds.

5. Wampum, cowries, whales’ teeth, large stone disks, cigarettes and liquor are some examples of fiat money.

6. “Greenbacks” were the first paper money issued by the U.S. federal government.

7. The word “salary” derived from “salt”.

8. Of evils upon earth, the worst is money.

9. An economy could hardly function without money.

10. Money affects morals and ideals.

11. Money and currency are frequently confused.

12. Hard money has real universal value.

13. Soft money is backed by hard money.

14. Hard and soft money are widespread these days.

15. No-money is most common type of money these days.

16. Fiat money is not money at all, it is currency.

17. There are few forms of currency.

18. The term fiat money means “assets of Fabrica Italiana Automobili Torino (FIAT) [`fi: ət]”.

19. People are generally unwilling to accept fiat money in exchange for the goods and services.

20. The bills and coins that we use today are examples of no-money.

Task 14. a) Match the terms in column A with their definitions in column B:

A

B

1. allowance 2. watermark 3. noble metals 4. intrinsic value 5. native intelligence

a)a hidden design on a piece of paper that you can only see when you hold the paper up near a light; b)the real value that a company, an asset, etc. has, rather than the current value as shown, for example, by share prices or its market value; c)mental abilities that a person has had since birth; d)valuable metals such as gold, silver, or platinum; e)an amount of money that is paid to someone regularly or on particular occasions by their employer or by the state, to help them pay for travel, food, somewhere to live or other expenses;

b) Translate into Ukrainian paying special attention to the words in italics.

1. The company gives me a travel allowance.

2. Watermarks make it difficult to counterfeit banknotes.

3. The company’s intrinsic value is well above $25 per share.

4. Students are encouraged to develop their native intelligence.

5. Backing is the support in gold or precious metals for a country’s issue of money in notes.

Task 15. a) Find 11 pairs of synonyms among the words given below.

1. Allowance; 2. array; 3. beginning; 4. case; 5. to fashion; 6. incredible; 7. instance; 8. item; 9. noble; 10. object; 11. origin; 12. payment; 13. to plunder; 14. pocket money; 15. precious; 16. range; 17. to sack; 18. to shape; 19. small change; 20. unbelievable; 21. value; 22. worth.

Task 16. a) Find in the text “What is Money?” (Task 12) the words opposite in meaning:

1. Cheap; 2. to doubt, to hesitate, to be uncertain; 3. extrinsic; 4. rarely; 5. to reject; 6. specific; 7. unavailable; 8. unreasonably; 9. unwilling; 10. valuable.

b) Use antonyms of the above words (Task 16 a) in the following sentences.

1. The first money were objects with _____ value.

2. No one _____ when and where money originated.

3. Fiat money is intrinsically _____ (or almost _____).

4. Commodity money is not commonly-_____ these days.

5. People do distinguish between “cash” and “money,” and _____.

6. Paper money was used _____ throughout Europe in the Middle Ages.

7. People are willing _____ fiat money in exchange for the goods and services.

8. Noble metals are called hard money because they are hard assets with real _____ value.

Task 17. “ Odd man out.” In each line cross out a word that in its meaning differs from the others. Explain your choice.

1. money – fire – wheel;

2. wampum – cowries – gunpowder;

3. stones – liquor – tobacco;

4. the Civil War – the Ming dynasty – the Middle Ages;

5. “greenbacks” – platinum – soft money;

6. native intelligence – a habit of dishonesty – lure;

7. cash – money – currency;

8. coin – watermark – ink;

Task 18. Fill in the blanks with noun or adjective forms. Use your dictionary if necessary.

NOUN	ADJECTIVE
1. -----------	moneyed
2. origin	-----------
3. -----------	objective
4. value	-----------
5. -----------	inclusive
6. extension	-----------
7. -----------	intelligent
8. habit	-----------
9. -----------	dishonest
10. confusion	-----------
11. -----------	noble
12. worth	-----------
13. -----------	willing
14. creation	-----------
15. -----------	expensive

Task 19. Use the correct noun or adjective forms in the sentences. Change the grammatical form of the words if necessary.

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