Rarely do we ask why people are so willing to accept them in exchange. At one time, they stood for gold. The story of why gold was once our money, what purpose it served as the basis of our monetary system, and why government revoked the gold standard is the topic of this lesson. It is an unusual fact, to say the least, that gold has been so universally recognized not just as a valuable commodity, but as money itself.
Money is the commodity which serves as a general medium of exchan ge in a society.
This means that almost every trade in the economy involves money as one of the two goods or services being exchanged. Although most developed economies today use paper money that has no connection with gold, these paper currencies mostly have their origin in gold. That is, there was a time when these paper notes could have been redeemed for a certain quantity of gold or for some other currency that had a history of redeemability in gold. More than any other commodity by far, gold has been trusted as one that others would reliably accept as money. Imagine a primitive agricultural barter economy.