200 WORDS – What Is Money And Why Is It Awesome?

Assume Man A has 3 apples and Man B has 10 oranges. If Man A wants an orange and Man B wants an apple, they can directly trade between themselves (“barter”) in order for both to get what they want.

However, what if Man B doesn’t want an apple? Maybe he wants a banana… If Man C has a banana and also happens to want an apple, Man A could trade an apple for a banana, and then the banana can be traded for the orange (an indirect exchange).

If Man C doesn’t want your apple however, then you add at least one more level of complexity. In all likelihood you would need many more partners in the transaction and with each successive level Man A becomes ever less likely to get his orange.

But what if there was one type of “Universal Fruit” that everyone wanted?

Money is “Universal Fruit”. Money allows us to engage in infinitely more complex trades than we ever possibly could if we had to directly barter for each good or service we wanted. This ability to efficiently trade allows us to acquire quantities and types of goods impossible without it, thus enriching our lives.

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