Credit Cards

The concept of credit itself can be traced back thousands of years ago to ancient Mesopotamia.

The idea itself has not changed much since then: you can go to a lender and ask for a loan. Back then, the transaction would be inscribed onto a clay tablet to keep track of what is owed.

But today it usually involves filling out forms with relevant information (the assets you own, your salary, etc) and waiting for the lender’s decision to approve or reject the request.

Once approved, you are given a card that can be used to purchase items in stores.

🗒 Side note: Now that more people have access to credit, some economists refer to payments made by debit and credit cards as “plastic money”.

Beyond Physical Objects: Contactless Payments

Contactless payment services are something that we are seeing more and more of from financial institutions. Here, customers can make a payment without having to insert a physical card into a reader. This is possible because of “near field communication” (NFC) technology.

This technology allows two devices to communicate with each other through short-range wireless connectivity within a few centimeters of each other.

NFC technology also works on most modern phones. If you own a smartphone, you either use it or have the ability to pay for items using your very own phone!

Now, modern money sounds great, doesn’t it? It’s light, convenient, and easy to use.

But as with any technology, comes its disadvantages. We’re now facing a value crisis: modern money is losing its worth.

Wait what?

Money, You’ve Changed…

Up until 1971, the US dollar was backed by a fixed amount of gold in what was known as the Gold Standard.

This gave the currency inherent value since gold has been used as a store of value for thousands of years. However, President Nixon abandoned the Gold Standard on August 15, 1971, meaning that the US government would no longer convert dollars into gold.

This move enabled central banks to start printing money without the need for an equivalent amount of gold. But the more of something that exists, the less valuable it generally becomes.

Over the past few decades, this has resulted in many problems associated with inflation, which is the increase in the price of items over time. This means that consumers lose their purchasing power as the value of money declines.

To put it into perspective, let’s take an example of a hamburger, which in the 1980s cost only 15 cents. But today, you probably wouldn’t even be able to buy chewing gum with that amount.