Money is simply a means of exchange. In pre-monetary societies, a bartering system was used in the direct exchange of goods and services between people. Barter eventually developed into various forms of commodity money or objects that most people wanted and were willing to exchange for goods and services. As a result, several commodities functioned as money, including tobacco and salt.
As money evolved over time, it developed into its most suitable form—gold and silver. These two commodities naturally arose in the marketplace as ideal forms of money because they possessed all the required attributes—durability, divisibility, convenience, consistency, value, limited supply, and wide acceptance.
Later, in the evolution of money, people deposited their gold and silver in banks, exchanging it for paper negotiable receipts which were backed by gold and silver. Over time, bankers noticed that not everyone wanted their gold and silver back at the same time, so they came to the realization that they could make loans more than the gold and silver on deposit while earning interest on the loans simultaneously. Thus, fractional reserve banking was born. Banks loan money they do not actually have and charge interest on it, not to mention that Federal Reserve Notes or dollar bills are based upon debt. It is because of this “sleight of hand,” debt-based system that the world is in the predicament it is in today. “Fiat” currencies, which are backed by nothing and are only given value by decree of the government, have been the scourge of the planet. Moreover, historically, they always collapse. For example, the American dollar has been so de-valued, due to over-production and circulation, that it is now worth virtually nothing.
What is known as the BRICS countries (Brazil, Russia, India, China, and South Africa), have rejected the American dollar for use in their trade agreements and other financial issues. These countries represent a large portion of the world’s economy and could well be an indication of what is to come if other countries follow suit.