Histry Of The Currency
Posted on December 30, 2009
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If one looks at the history of the Currency Evolution, it is quite interesting. In the earlier days the various rulers introduced the gold coins as the exchange in the various trade practices. They were very pure to the core and the there was real value for the money that was in gold. When the trade volumes increased and the shortage of the gold was observed, decree was passed by the ruler to reduce the weight and the purity of the gold coins, but retaining the same value. This had resulted in the “bad money driving the good money”. People started to use the pure gold coins for other purposes by melting it while the coins of inferior quality ruled the trade.
Then, came the paper currency which was equated with the gold and silver. According to the decree, the paper currency can be exchanged for the gold and silver based on the value determined. There again, when the gold and silver shortage was observed the respective governments had devalued the currency so that the holding in the hands of the public is brought down.
Now in countries like Jimbabwe, the reduction in the value of the currency had drastically reduced the purchasing power of the currency leading to the astronomical inflation level. Politicians and the policy makers in the Government should bestow their attention to maintain the fair value of the currency to ensure balanced growth of the economy and ensure reasonable price of the goods used by the common man.
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