Bell Ringer Tuesday, November 29, 2016 Take a moment to think what would life be like in a barter economy, a moneyless economy that relies on trade. Please be as detailed as possible

Objective Money was invented to facilitate the exchange of goods and services. The role of money and financial institutions in a market economy. The basic functions and characteristics of money.

Agenda Bell Ringer Attendance CNN Student News Vocab Mini lesson (Evolution of money w/ checkpoints) Lesson one review Cobra tv

The evolution, functions and characteristics Money The evolution, functions and characteristics

Vocabulary Barter economy Commodity money Fiat money Specie Monetary unit Medium of exchange Measure of value Store value

Evolution of money Money used by early settlers in the American colonies was similar to that found in early societies that used a barter system. Some consisted of commodity money, money that has an alternative use as an economic good, or commodity. Commonly accepted commodity money was tobacco.

Evolution of money Fiat money is a form of money by government decree, meaning it has no alternative value or use as a commodity. in 1637 Massachusetts established a monetary value for wampum, a form of currency used by Wampanoag Native Americans.

Checkpoint If the Governor of colonial Virginia put a commodity rate on tobacco of 3 English shillings equals one pound and a horse cost 50 schillings how many pounds of tobacco would you need to acquire a horse? What is fiat money? Can you name some things we might use today as commodity money if we lived in a barter economy?

Evolution of money Early paper currency Paper currency became another popular form of fiat money in the colonies. Some state laws allowed individuals to print their own paper currency if they promised to redeem the currency for gold or silver. At the time of the Revolution (1775) the Continental Congress issued paper money to finance the Revolutionary War. This money had no gold or silver backing.

Why might allowing individuals to print their own paper currency be problematic during the colonial period in America?

Checkpoint (Critical Thinking discussion) How would government, schools, or other services function without money?

Evolution of money By 1776, only $12 million in specie circulated in the colonies, compared to nearly $500 million in paper currency causing the Continental dollars to be worthless by the end of the war. The most popular coin in the colonies to this point was the Spanish peso which came to America through trade and piracy.

Evolution of money Spanish pesos were nick named taler, which eventually became dollar The Spanish peso was divided into eighths, but the dollar would be divided into tenths, making it easier to understand. The Spanish peso still remains to this day when people sometimes call a 25 cent coin one quarter of a dollar (two bits is one quarter of the Spanish peso).

Characteristics of money First it must be portable, or easily transferred form one person to another. Second, money must also be reasonably durable so it does not deteriorate Third, money should be easily divisible into smaller units. Finally, money must be available, but only in limited quantities.

Functions of money 1. Money must be accepted by all parties as payment for goods and services 2. Money serves as a measuring stick to used to express the worth of something in terms that most people understand. 3. Money allows purchasing to be saved until needed.

Classwork Complete the lesson one review on page 281.

Agenda Bell Ringer Attendance CNN Student News Vocab Mini lesson Cobra tv

Bell Ringer Thursday, December 1, 2016 During the Revolutionary War, nearly $500 million of Continental paper currency was printed. Why was this problematic?

Vocabulary State Bank Central Bank Legal Tender Federal Deposit Insurance Corporation (FDIC) National Bank National Currency Gold Certificate Silver Certificate Gold Standard

Early Banking in America

Early Banking in America By 1811, 100 state banks were operational and authorized to print their own currency by the federal government. Banks were only printing money currency that was backed by silver and gold reserves, but in less populated areas the banks were over printing currency. Why would banks in less populated areas print more currency than they had in gold or silver reserve?

Early Banking in America (Problems with currency) First each bank issued its own currency in different sizes, colors, and denominations (hundreds of different kinds of notes would be in circulation). Second, banks were tempted to issue too many notes because they could print more money whenever they wanted. Third, counterfeiting became a major problem.

Early banking in America (problems with currency) During the Civil War congress decided to print paper currency because they could not raise money to fight the war. In 1861 $60 million in new currency that had no gold or silver backing was authorized, congress simply declared they were legal tender These new notes were called greenbacks, the war dragged on, people became fearful the notes would become worthless, and stopped using them.

Early Banking in America (The national Banking System) 1863, Congress enacted the National Currency Act, which created a National Banking System made of national banks The creation of a national bank established a national currency, which are bank notes backed with bonds that the bank bought from the federal government Why would a person feel more comfortable banking with banks who are apart of the National Banking System?