A Word About Money
Many of the words we associate with money today come from ancient uses of currency. Examining where these words came from helps us understand how currency systems developed.
- Buck - Early settlers in North America relied heavily on the skin of the deer for trade. Each skin was referred to as a buck.
- Pecuniary - This modern word means, "relating to money." It comes from the Latin word pecus, which means cattle.
- Fee - This word comes from the German word for cattle, vieh.
- Shell out - The use of shells as currency among Native Americans, and, later, the European colonists, led to the phrase "shell out," meaning "to pay."
- Salary - This is another money-related word we got from the Romans. At one point, Roman soldiers were paid part of their wages in salt. The Latin word salarium means "of salt."
- Dollar - A count in a Czechoslovakian town called Jachymov started minting silver coins in 1519. The coins were known as talergroschen, which was eventually shortened to talers. They spread throughout Europe, and today, many nations have currency named for some variation of the word taler, including the American "dollar."
The Gold Standard
"The complex mechanisms of the modern world depend as certainly on the faith in money as the structures of the medieval world depended upon faith in God." - Lewis H. Lapham, author and editor
One of the long-standing myths about modern currency is that it is backed by the U.S. gold supply in Fort Knox. That is, you can trade your greenback dollars to the U.S. government for the equivalent amount of gold bullion at any time.
At one point, this was true of most paper currencies in the world. However, the U.S. took away the government backing of the dollar with an actual gold supply (known as leaving the gold standard) in 1971, and every major international currency has followed suit.
The obvious question is, "Without gold, what does guarantee the value of our money?" The answer is: nothing at all.
The only reason a dollar, or a franc, or a Euro has any value is because we have a stable system in which people are known to accept these pieces of paper in return for something valuable. Or, as Nobel Prize-winning economist Milton Friedman puts it, "the pieces of green paper have value because everybody thinks they have value."