As we all know, greater things comes with greater responsibilities.In this chapter the birth of paper money has began to arise which made a lot easier for people to use. The good attributes of money also brought chaos among those who lack control creating centralized and imbalance wealth distribution.
Chapter 2.
The economy has evolved in continental trading that people will thrive long distance travel only to cause men in exhaustion dragging large bags of coins which were very heavy to carry. It delayed transactions causing them to fail wealth distribution and lost important settlements.
The Chinese rulers created a better way to produce a much lighter object, issuing paper money as a written promise that the ruler owes to whom the paper money is given an "I owe you note" (IOU) a certificate with a stamp of the authority, written on a piece of paper. It has a written promise that traders can always go back to the capital to get the amount of coins written on the certificate issued by the Chinese Rulers.
Through this form of exchange, people noticed that these paper slips were always good to use for trading in exchange for other goods where they rather exchanged with paper money than to carry piles of coins which were heavy and inconvenient. Traders absorbed trust in using paper money and to rely on the value of what is written on the paper.
Paper money became a medium of exchange circulating everywhere. Which made the rulers print more and more paper money as they realized that the more paper money stored the more power they get to have gain more control over their people. This lasted until the 7th century of Tang Dynasty to 11th Century of Song Dynasty. This paper money circulated everywhere and was spread outside China. Ghaykhatu, the 5th Ikhanite ruler in Iran, printed his own paper money after splurging the royal money and strangled himself with a bowstring.
Italy, the economic dynamos of Europe influenced by China, also issued promissory notes, like there own version of "IOU''.
In the next Chapter, we would meet the economic gurus of England, the forefathers of our modern financial system on how their clever minds facilitated the banking system in which we are experiencing today.