Journal 1.) With all the credit/debit cards, checking accounts, check cards, gift cards do we even need a paper currency anymore? Explain why or why not? Demand: willing and able to buy Supply: willing and able to sell/produce. Scarcity: supply is low and demand is high.

Early Money An extremely valuable piece of paper.

Evolution of Money Limited Availability: –Things are only worth something if they are scarce –Therefore money must be scarce! –If we all had access to as much money as we wanted what would happen?

Types of Money Anything can work as “money” as long as it is scarce. –Sea shells –Animal bones –Beads –Gold –Silver –Jewels

Origins of Banking Banks printed the money. Problems: –Banks would print to much money. –If the bank failed, the money failed. There wasn’t anything to back up its value. –Paper money is only worth something because we say it is.

People had little confidence in the paper currency.

National Currency National Bank: –Produced currency that was the same throughout the United States. –Made it illegal for anyone other than the United States treasury department to print money. –Money was backed by Government Bonds.

First National Currency

New Federal Money Gold Certificates: –Paper currency that is backed by gold stored by the U.S. government. –In 1882 it was printed for public use. Silver Certificates: –Paper backed by silver –Like a light silver dollar

The Gold Standard In 1900 congress passed a law backing all U.S. currency with Gold!! Notes could now be exchanged at the treasury for gold at any time. Billions of dollars worth of Gold stored at Fort Knox.

The Gold Vault

Fort Knox

Abandoning the Gold Standard Dropped in 1930s during the depression. Never was enough Gold to back all the money in the U.S. Figured that all American’s would never cash in their notes at once.

Inconvertible Fiat Money Standard Money supply cannot be converted into gold or silver. What we have today! A managed Money Supply: –Quantity and production controlled by the government.

Discontinued Notes

Modern Money Portable: –Easy to transport. Divisible: –Can make exact change. Limited Supply: –A scarce resource Price Stability: –Government can control amount in circulation.

Journal If you were given $100,000 what would you do with it? Why? Be specific! And realistic. Explain in paragraph form.

Banks and Credit Unions Mutual Savings Bank (MSB): –Place to store money. –The money accumulates interest over time. Credit Unions: –Nonprofit bank that is owned and operated by and for its members. –Usually cheaper and often good interest earning accounts.

Federal Deposit Insurance Corporation Guarantees up to $100,000 of your money will be replaced. (currently $250,000) Created to give people more confidence in the banking system.

Why would you put money in savings? In pairs come up with a list of reasons why you would put money away for future use. –To make money –Insurance for the future –Save for a big bill –Retirement

Checking Accounts Why do you need a checking account? How does it work? –When someone cashes your check it takes money out of your checking account. –Some build interest over time. –If you check bounces, you are charged a fee. –Debit cards work the same way.

Credit Cards Credit Line: –The maximum amount you can spend on that card. Interest: –How much they charge you for borrowing money. (Usually between 9% & 22%) Late fees: –Charged money, interest will go up as much as 25%, and you get a bad credit history. Minimum payments: –Usually $15. This is how credit cards make money!!

Problems with Credit cards! Only should be used for emergency or to build credit. You shouldn’t need more than one!!!! It is easy for debt to spiral out of control.

Why you need good credit? Without credit you can’t buy anything that may require a loan! Or rent a house or maybe even get a job. –House –Boat –Car –Start a business!!!!