A circular history of money

Stage 0

I don't know what money is, but I'll give you this nice shiny piece of metal for that loaf of bread.

Stage 1

I know what money is: this nice shiny piece of metal is money, and it's worth exactly it's value as a piece of shiny metal.

Stage 2

I know what money is: this nice shiny piece of metal is money, and I have refined it to very high purity and stamped my mark on it. My mark is your guarantee of its very high purity, and consequently it's worth a premium over other shiny bits of metal of the same weight.

Stage 3

OK, yes, I might have adulterated the metal just a little tiny bit, but it's still got my mark on it so it's still worth a premium over other shiny bits of metal.

Stage 4

Hey, all those shiny bits of metal are heavy to carry. To save you the trouble I'll just put them all in this vault here and give you pieces of paper instead, but it's OK because those pieces of paper just represent nice shiny metal and I've even printed a promise on them saying I promise to pay the bearer on demand in nice shiny metal...

Stage 5

Well, OK, no, I don't actually have enough shiny metal to back all the pieces of paper. I seem to have printed too many. But it doesn't matter because, well, paper is money these days, isn't it? Everyone accepts it. And you know I won't ever print any more of it, so it's guaranteed to keep its value.

Stage 6

Yes, well, sorry. I lied. But it doesn't matter because... Look! Shiny!

Stage 7

All that paper's really inconvenient to print and it wears out too quickly. But hey, this number on this computer disk represents all the money we've printed, so we'll just do sums with that and everything will be fine.

Stage 8

See, there's been this economic meltdown thing - which was nobody's fault, it just happened - and somehow it's affected the computer and the number's got a bit bigger. Accidentally. But that's OK because we'll give the extra money to the very rich bankers and they'll lend it to you.

Stage 9

They kept it for themselves? Are you sure?

Stage 0

I don't know what money is, but I'll give you this nice shiny piece of metal for that loaf of bread.