The history of money reveals patterns that help us understand what makes money successful and why certain monetary systems fail.
Commodity Money Era: Early humans used items with intrinsic value - cattle, salt, shells, stones. These had practical uses beyond being money.
Precious Metals Era: Gold and silver emerged as superior money due to their unique properties: chemical stability, divisibility, portability, and natural scarcity.
The Gold Standard: Paper money initially represented claims on gold. This system combined the benefits of gold (store of value) with paper's convenience (portability).
Bretton Woods System (1944-1971): Established the US dollar as the world's reserve currency, backed by gold at $35/ounce. Other currencies were pegged to the dollar.
The Nixon Shock (1971): President Nixon temporarily suspended gold convertibility due to mounting pressure on US gold reserves. This 'temporary' measure became permanent.
The Fiat Era (1971-present): Money is now backed only by government decree. This has enabled unprecedented monetary expansion and manipulation.