Money is valuable because people trust it. In a society, people trust in the value of money because they believe that it’s valuable. Trust is vital for all aspects of finance, from physical currency to virtual transactions across the world. We also trust banks to keep our money safe, which they trust us to pay back when we take out loans. We trust that the money we use will hold its value and that our central banks won’t overproduce it. Trust is a crucial element in the value of money. It doesn’t matter what the money is made of, as long as society trusts its value. The conquistadors failed to realize that money is valuable because of people’s trust in it. However, this led to a devaluation in its value regardless of what metal was used to create them. They thought that if they acquired more of it, they could make more coins with it. When the Spanish conquered Central and South America, they were looking for gold and silver. Big Idea #1: The value of money comes from the trust we as societies place in it, not from its intrinsic worth.

The financial system is constantly evolving and adapting, just like species in an ecosystem.

If firms don’t adapt to the changing environment, they will not be able to survive. This is similar to how genes reproduce in nature. In both cases, firms adapt to new situations in order to grow and prosper. Just as the natural world evolves through market selection and gene reproduction, so does the financial system. New species grew in the spaces left by the extinct ones, just as mammals took the place of dinosaurs after the meteor disaster. But sometimes events happen that cause extinctions on a large scale.įor example, a meteor wiped out almost all life on earth 64 million years ago. This is continuous new species always come about due to the decline of other species. Usually the species which are able to spread their genes through reproduction and multiply in number eventually take over from those declining species. The fight for these resources is vicious, and failure will often result in extinction.

In most environments, there are only enough resources to support a limited amount of life. 1-Page Summary of The Ascent Of Money OverviewĬharles Darwin discovered that life evolved through a process known as natural selection.

The ascent of money book