The history of money reveals that money is invented by humans to solve a problem of trade. Private property produces production and production produces trade. Exchange (trade) of production produces this inner concept called ‘value’ and then this inner concept of value leads to the invention of ‘money’. Money derives from our ‘inner’ being and then it becomes ‘outer’. Let’s explore this difference further for full understanding.

As a human being I live within my consciousness (spirit) and my consciousness (spirit) lives within a body/brain. This reality was developed way back around 420 B.C. with Socrates and developed as a philosophy with Plato and thinkers who followed him. Basically, the view centers on the idea that my ‘mind’ is distinct from my ‘body’. Ideas or forms are living within the human ‘mind’ and these forms then get created into objects or things.

Money is an idea or form (of my/your ‘mind’) which we can call an ‘invention’ of the mind after it becomes developed. America started mostly with the people who emmigrated from Europe and started a new life and system here in America. The start of America can be considered to be in 1607 and 1620. Jamestown and Plymouth Rock witnessed the beginning of America as we know it. These founders promoted a philosophy which grew into what we today call Capitalism.

The core foundation of Capitalism is this ‘thing’ called money. For Americans, money emerged from a legal system called ownership and/or private property. This led to production of goods by private citizens and then to exchange of these goods within a private marketplace. Exchange led to this inner concept called ‘value in exchange’ (value) and then to this ‘outer’ thing called ‘money’. Outer money became our proxy for this inner concept called ‘value in exchange’.

Over time private people in our marketplaces chose their proxies for ‘value’. People chose an ‘outer’ money object to serve as their proxy for this ‘inner’ concept called ‘value’. Gradually, private people chose this ‘thing’ called silver (and later gold) as their proxy for ‘value in exchange’. This led to Thomas Jefferson choosing this commodity as our ‘outer’ money item and he then ‘defined’ this ‘outer’ item to give everyone a reference point for ‘valuations’ in the marketplace.

In 1792 our first Congress produced the Coinage Act of 1792 and then defined all our chosen currency units (dollar, half-dollar, quarter, dime, nickel, penny). Americans now had ‘outer’ money units which they could use to create ‘prices’ in the marketplace. Prices emerge from private negotiations as they discern the relative ‘values’ of goods being traded. Prices (in dollars) defined specifically in terms of silver created the initial model for all price discoveries within our markets.