 I'll introduce our first speaker this morning, Dr. Mark Thornton. Mark is really the heart and soul of our academic team here at the Mises Institute. He's a PhD economist, went to Auburn. University right across the street has taught both at Auburn and at Columbus State in Georgia over the years a great resource for any of you who think that you might be interested in economics as a major or even a profession going forward. And he's an expert on the economics of prohibition. And he's also very knowledgeable about the skyscraper index, which is something that you may not have heard of, but I encourage you to Google it and it'll help you understand why sometimes there's a bunch of cranes on the Atlanta skyline and why sometimes there's none. So with that, I'll introduce Dr. Mark Thornton. Welcome to the Mises Institute and especially all those who are watching online. We've got a tremendous crowd today for a very important topic, inflation. It's cause and it's consequences. What it does is to society, excuse me. The task of economics is to take us beyond the obvious. And my topic this morning is what is money? And that seems like a pretty obvious subject matter. We all know what money is. It's these little pieces of paper that we use on a regular daily basis to buy things. That's the obvious answer to what is money. We already know the obvious answer, but we wanna know what's less obvious about money so we can know why it's so very important and why it can even be highly destructive. Okay, so what first seems like a stupid question. It's just something that we all use on a regular basis to buy stuff. We work for other people in order to earn money in order to buy stuff. But the ultimate purpose of money is much more important. Think about a world that you live in right now where there are farmers in South America who are busy growing crops, fruits and vegetables and so forth. And those products are gonna be sent here to the United States for us to consume. And there's farmers in the U.S. that are growing crops right now, corn and wheat and soybeans, cotton, that's gonna be sent back to South America over to China. And in China, they're very busy putting together the next set of iPhones. They've imported parts from more than a dozen different countries, several dozen different companies and all those parts are imported into China. They're assembled and sent to the United States and other countries around the world. So the world economy is very, very complex and the task of getting that whole thing organized where in a sense, everybody in the world is working together, working to help other people and those other people are helping us acquire the goods and services that we consume. All the clothing that we're wearing, I bet virtually everyone in this room is wearing some article of clothing that was imported from a different country. If you wear cheap shoes, flip flops, very expensive shoes, chances are they were imported from a different country than the United States. So we're in a sense all in this together and it's money that is the communication device. It's kind of like the worldwide web and that everybody can use it, we're all interacting, we're adding things into it, we're taking things out of it. Well, the world economy is like the web in that sense and money is the communication, transacting device that allows all of that to take place and it's very important to remember that if we didn't have money, that couldn't take place. We would all be in a very primitive existence trying to make our own food, our own clothing, our own shelter. Is anybody up for that? Is anybody up for trying to make their own clothes? Wow, don't wanna go there. So a money, a world with no money is something we certainly want to avoid. It would be nice to go back in time to see how people existed under those circumstances but we certainly wouldn't wanna try to live that existence ourselves. And what we find is that over time, money has gotten better and better and better at least until recent years. So, you've all been in school, you've been studying history, read the Bible, know a little bit about science, inventors, discoverers, Christopher Columbus, right? So who invented money? Any ideas? You mean you've been going to school all this time and nobody told you who invented money? Wow, what a disappointing educational system. Parents, anybody? No? Hmm, well that's a puzzle, isn't it? We've got this thing that's vital to our very existence and yet nobody in all this time lets you in on the secret of who invented money. Well, the thing of it is no one invented money just in case we get any ideas. It's kind of a result of a spontaneous order that took place during that primitive existence. Many thousands of years ago, Jeff mentioned 10,000 years ago, that's kind of the time period that we're looking at when there was no money and that if you wanted to make an exchange with somebody else, a barter exchange where you gave an item to somebody and they gave you something that you valued so that as a result of that transaction you were both better off. Now, that's simple, it's very direct, but it's also very difficult. You have to have what's called a double coincidence of wants and I want you to write that down, a double coincidence of wants. It's just a coincidence that you have what I want and I have what you want and we're willing to trade those two things and benefit, we both benefit from that. So this would be very difficult in a complicated world. What would you have specifically that Apple wants in order to get an iPhone? You don't know how to do anything that they really need. We don't know how they put those things together, how they make those chips and while you could probably find, eventually find something that you could do for Apple, think of my situation. If I go to the grocery store, load up my cart with a bunch of food and I go to the checkout and I said, now gather all your employees together, I'm gonna give you a economics lecture. How far is that gonna get me? Okay, my food, clothing and shelter all of a sudden start shrinking to a very small basket, okay? So this double coincidence of wants, which is barter, is very difficult to pull off and as a result, society remains at a very primitive level. Okay, what if we have two people, for example, Richard and Harold. Now Richard is a shoemaker. Harold is a cabbage farmer. Harold wants a pair of shoes, but Richard can't stand cabbage. Does not like sauerkraut or anything to do with cabbage. And so in that circumstance, there's no trade, there's no bargain. Richard can't stand cabbage, but Harold wants a pair of Richard's shoes. But Harold also knows that as a cabbage farmer, Harold has salt. You need salt to mix it with the cabbage in order to preserve it. So Harold's got shoes, excuse me, Richard has shoes, Harold has cabbage, but also salt. Richard doesn't like salt either, but he does know a guy named Thomas has a cattle ranch. And he knows that Thomas needs salt to preserve the beef that Thomas produces. So Richard sells the shoes to Harold for two pounds of salt and then he takes that two pounds of salt and he goes to Thomas and gets one pound of beef. So what Richard has done by knowing this information about his friends and neighbors is he's used salt as a medium of making an exchange so that Richard gives Harold the shoes, Harold gives Richard the salt, Richard gives the salt to Thomas in exchange for beef. So the salt in this instance has become a medium of exchange and money is nothing more than a very commonly used medium of exchange. And in a sense, it has become money. And as a matter of fact, salt was a very early form of money thousands of years ago. Salt was much more important in daily life because it was used to preserve food. So when you harvested or you slaughtered animals, you would use salt to preserve food because there was no refrigeration. And so everybody had some need for salt but even if you didn't need salt as in Richard's case because he's just making shoes, you can use that salt as a medium of exchange. Salt is homogenous. It's the same everywhere. It's divisible into small parts so you can make exchanges. It's easily transportable and it doesn't perish. Now animals were also an early form of money. Sheep, cows, goats would be transacted used in certain transactions. So if you were buying land from somebody, you might give them several cattle but cattle have a definite disadvantage as money. They're not easily divisible. In other words, you can't just cut a cow in half and sell one to one person and one to another. First of all, they become not easily transportable once they've been cut in half and they're easily perishable. Okay, so in order to have a good money, it has to be pretty much homogenous, the same. One pound of salt is pretty much the same as another pound of salt. It has to be easily divisible in order that we can get more precise prices in those exchanges. It has to be non-perishable because if you're holding money, you don't want it to lose value and it has to be easily transportable. And so in these early days of civilization, there were a lot of things that took on the qualities of money such as salt, such as grain, such as animals in large transactions. And eventually, people started finding out that silver and copper and metals were really a better money qualities than these other things. Okay, copper and silver are homogenous. They're easily divisible. They're non-perishable. And they're easily transportable. Okay, so if you wanted to say use salt to buy a house from somebody, you would need an enormous amount of salt in order to do that. But if you were using gold, you'd only need a few pounds of gold in order to buy a house. So as society pressed forward and we discovered better and better qualities of money, people's gravitated towards things like copper, silver and gold. And then eventually about 4,000 years ago, people started finding out that they could make this metal into coins. And people went into the business of making coins that were of the same weight and they would be certified by the person putting their mark on the coin that said, this is Mark Thornton's coin. He weighed it out and it's approximately five grams of silver. And so this really opened up tremendous opportunities for trade and gold and silver became world money basically. In the early days of the United States, a lot of things were used as money. The Native Americans used wampum, they used seashells, rare seashells as money. The early American colonists tended to use commodity money not necessarily gold and silver but even things like tobacco so that you would make transactions in terms of pounds of dried tobacco. One thing that was very popular in the colonies and even the early American period after the American Revolution was the Spanish peso. The Spanish peso were silver coins that were minted in Mexico City and shipped to the United States and Spain and around the world. And so it was a world currency. Anybody in here from Auburn? Any Auburn fans? Anybody back to an Auburn game? Well then this story will make some sense. The colonists would take a Spanish peso which was worth a lot of money, but what they did was they cut it, they cut the coins up into eight sections. So it would be like taking a pie, a round pie, and cutting eight pieces of pie. And so it wasn't necessarily the peso that was circulating but it was these little bits of the peso. And that's where you get the Auburn cheer. Two bits, four bits, six bits, a dollar, all for Auburn stand up and holler. And so we did use the Spanish peso, but as you now know, we use the dollar. And the dollar comes from a European currency which is this coin. This is a replica of that coin and it's got the image of Princess Maria Theresa Thaler. At least I thought it used to be Thaler because that's how it's pronounced, that's how it's spelled. But it's pronounced taller. And so if you Americanized the Austrian taller, you get dollar. And so that's where the American form of money came into existence. And so we've gone through this process, this thousands of years process of going from barter to commodity money to coins to the dollar. And then in 1913, the Federal Reserve System was formed and we've had a hundred year degradation of that process that's resulted in these paper things that can be printed up at Infinitum and really don't have any intrinsic value. Any more, you've all played Monopoly, right? Well Monopoly money doesn't really have any real value. Well that's the problem with these things. They don't have any real value and if you were playing Monopoly and you were the bank and you could just take money from the bank in Monopoly, well that's the kind of system we have today. Thank you very much.