The Origins of Money by Carl Menger Chapter 9 - The Influence of the Government on Money

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Did governments create money—or did it emerge naturally? In this video, we explore Carl Menger’s view that money arose not from state authority, but from voluntary trade and social interaction. Precious metals like gold and silver became money because of their high saleability, long before any government gave them official status. However, sovereign powers later played a crucial role in refining money’s use by minting coins, maintaining weight standards, and regulating currency circulation. These actions built public trust and helped smooth complex trade. When multiple forms of currency caused confusion, governments intervened by legalizing specific forms of money and setting fixed exchange rates. But even then, they didn’t invent money—they merely shaped what already existed. Learn how the state’s influence supported, but did not originate, the institution of money.

Questions Answered:
-Did governments invent money or adopt it?

-How did money exist before official laws?

-What role did states play in coinage and standardization?

-Why did governments step in when multiple currencies existed?

-What is legal tender, and how did it evolve?

-How did state actions build public trust in money?

-Why were gold and silver chosen for official coinage?

-What problems arose with competing currencies?

-How did fixed exchange rates improve trade?

-What was Carl Menger’s view on the origin of money?

00:00 - Introduction to the Influence of the Government on Money
00:09 - Money as a Social Invention
00:36 - The Emergence of Coins
01:10 - Addressing Currency Competition
01:42 - Government’s Role in Refining Money
02:00 - Closing


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