Topic: Money never sleeps

Author: Anna Rabiega

Addressee:

8th‑grade primary school student.

Core curriculum:

Expanded material for gifted students.

The general aim of education:

The student has some basic knowledge on the function of money.

Learning outcomes:

The student:

• analyses and explains the most popular proverbs and sayings related to money.

• presents the history of money development.

• presents the contemporary functions of money.

Key competences:

• communicating in a foreign language,

• digital competence,

• learning to learn,

• social and civic competences,

• sense of initiative and entrepreneurship.

Teaching methods:

• discussion,

• brainstorming,

• timeline,

• teaching conversation using interactive board, interactive scheme, interactive exercises.

Forms of work:

• self‑learning,

• group work,

• whole‑class activity.

Material & equipment needed:

• computers with loudspeakers/headphones and internet access,

• multimedia resources from the e‑textbook,

• interactive whiteboard/blackboard, felt‑tip pen/a piece of chalk.

Lesson plan overview (Process):

Introduction:

1. The teacher presents the goal of the lesson: You will analyse the history of money and its contemporary meaning.

2. The teacher informs the students that together they will explain well‑known sayings related to money. To this end, they will solve Exercise 1.

Implementation:

1. The teacher asks the students to count to four and remember their number. Afterwards, they are asked to read the information contained in the „What can be used instead of money?” interactive scheme. Each student studies the information contained under the assigned number, then the students merge form groups of four (students who seat next to each other with the numbers 1–4) and each student explains to the others what, when, why and by whom was used instead of money in his or her diagram, or presents other information contained in the diagram. The teacher monitors the process of the groups' work and makes sure that the students not only read the infographic but actually exchange information among themselves.

2. The teacher initiates brainstorming about what could nowadays be used instead of money. The teacher appoints a moderator and sets a time limit for this task. In the first part of the exercise, the moderator writes down on the board all the suggestions of his or her colleagues. The suggestions are not subject to criticism at this stage. When the time is up, the students jointly analyse their ideas and argue for and against using a given exchange medium. As a result of this discussion, they choose three best ideas. After the discussion, the teacher encourages the students to summarize it by asking:

• What are the functions of money?

• What conditions must be met by a means of exchange so that it might perform its function well?

3. The teacher divides the class into four groups. The task for each group is the same: prepare a time axis of money development using information contained in the abstract and other sources as well as using a free online application for creating a time axis (e.g. Sutori). The teacher explains to the students that since they will work on the same task, it is important that they do not focus only on the textbook, but also search the internet for various information illustrating different stages of the history of money (articles, photos, even short films). The application allows multiple users at the same time and its homepage contains a comprehensive instruction on how to take advantage of all the possibilities it offers. The teacher sets a time limit for this task and asks the students to work in groups and designate a spokesperson who will present the time axis to the rest of the class.

4. When the time is up, the spokespersons present the results of their group's work and the other students comment on the results, saying what they liked about the presentation and what they thought could have been done or explained differently. Afterwards, also the teacher briefly comments on time axes presented by the students and evaluates them.

Summary:

1. At the end of the class the teacher asks the students to finish the sentences:

• Today I learned…

• I understand now that…

• I was surprised…

• I found out…

• It was easy for me…

• It was difficult for me...

The last two sentences help evaluate the difficulty of the discussed question; they enable the student to evaluate his own knowledge and skills.

2. Homework proposal:

a. Familiarize yourself with the definitions contained in the „Definitions connected with money” interactive scheme. Explain in your own words what your understanding of the terms that are contained in the scheme is.

b. Listen to the abstract recording to review the material and new vocabulary. Then do the vocabulary exercise at the end of the chapter.

The following terms and recordings will be used during this lesson

Terms

Texts and recordings

Money never sleeps

Thanks to money, the economic exchange has become easier, faster and more efficient. Money facilitates trade. Some say it never sleeps, but constantly circulates in the economy.

Today it is hard to imagine an economy without money. However, this was not always the case. Even now you can find examples of barter exchange, which is a direct exchange of goods against goods (or services) without the use of money. What is money? Money is an agent in the economic turnover. It is a good commonly accepted as a form of payment for other goods and services.

Throughout the history of mankind money took various forms. For many centuries, mainly precious metals (gold, silver, bronze and copper) served the function of money. In the middle of the third millennium BC in ancient Egypt metal bars began to be used as money, if necessary cut into smaller pieces. Soon, money in a similar form appeared in China. The oldest round metal coins are known from Sardes in Lydia (Asia Minor) and come from around 650 BC. The ancient monetary systems were based on gold, silver and copper, and the value of the coins was equal to the value of the metal they were made of.

Changes in the mutual price relations of these metals and so‑called spoiling of the money by the rulers caused a gradual depreciation of money (the law of Copernicus‑Gresham). Nicolaus Copernicus is the author of the law of “bad” money, according to which the inferior money, i.e. made of inferior ore and of lesser value, displaces “better” money from circulation. Copernicus described the law in the third version of his treatise “On the Minting of Coin” (known as “Monetary Treatise”), in which he wrote: “When a new, worse coin is introduced into circulation next to the old, better coin, it not only infects it, but drives it out of circulation”. Decades later, similar views were presented by English financier, Thomas Gresham.

Money depreciation means lowering the purchasing power (value) of money. In the domestic market, it manifests itself in a decrease in the amount of goods and services that can be purchased for a certain amount of money. As a rule, it results in inflation. The reverse phenomenon – the increase in the value of money – is called appreciation. If the value reduction takes place as a result of official decisions, it is called devaluation.

History of money

Not only gold

As history has shown, gold played the most important role as money. The United Kingdom was the first to apply a money system based on gold. The main principles of the gold standard system (the so‑called Gold Standard):

• The domestic currency had a strictly defined gold parity, i.e. it was known how much gold it contained.

• Paper money was exchanged for gold at any request and without any restrictions.

• Gold could be freely transferred on an international scale (with the help of the so‑called automatic stabilizers of the gold currency, the balance of payment of individual countries was maintained).

The economic system based on the golden currency was destroyed by the first world war. During the Great Depression of the 1930s, all countries (except the United States, which suspended convertibility only on August 15, 1971) decided to move away from convertibility into gold. Convertibility to other currencies was also limited in scope. The global monetary system has broken into several currency blocks. These negative phenomena deepened after the second world war.

To avoid effects similar to those of the first world war, in July 1944, a conference was held in Bretton Woods in the United States to determine the principles of the post‑war monetary system. A so‑called the Bretton Woods system based on the US dollar and gold (the so‑called Dollar Standard) was established. The Bretton Woods system assumed the restoration of mutual convertibility of currencies according to fixed exchange rates. The International Monetary Fund (IMF) was to watch over this. The same year another important institution was created – the International Bank for Reconstruction and Development (IBRD) called the World Bank . At the beginning of the 1970s, the Bretton Woods system destabilized, which resulted in the transition of the IMF to a system of liquid exchange rates. In 1976, a decision was made to refrain from specifying currency parities in gold (the so‑called demonetarization of gold). The weakening position of the US dollar prompted the IMF to create its own settlement money - the special drawing rights.

In 1978, Western European countries created a separate settlement unit – ECU, valid until January 1, 1999, when the euro was created. The ECU was replaced by the euro in a ratio of 1 ECU = 1 EUR.

Money plays a fundamental role in a market economy. In fulfilling its functions, the most important of which is the function of being a method of payment, it can not exist without universal trust in it as a functional instrument of practical action. The basis of this widespread trust is its unchanging functional usefulness. Thanks to its properties, fiduciary money (from fidus - trust), that is, money without support in material goods (e.g. gold) functioning as a universal, mediating liquid asset, provides broadly understood economic freedom. Money is the only measure for the precise expression of the prices of economic goods.

The usefulness of money is determined by the state of economy. Inflation is a significant destructive force. In order for money to be a convenient tool nowadays, it must be:

• stable,

• accepted in the global dimension,

• giving the opportunity to make attractive investments,

• the state (official) currency - there is no gold, therefore the state is the guarantor.

Economic changes in the modern world cause evolution of the form of money. Money does not have to have a material form today (banknotes or coins). There is also non‑cash money (called bank or scriptural money, because it is the object of bank records). The possibility of using electronic (virtual) money seems to be the basis for transactions in the economy of the near future.

Money fulfills many functions. It is:

• a value meter – it is possible to express the value of other goods and services using money (you can compare the prices of goods),

• means of circulation (trade exchange),

• means of payment (means of regulating liabilities),

• means of thesaurisation (accumulation) - in order to fulfill this function, it must have stable purchasing power,

• global money – if it performs the above functions on the international market.

To fulfill these functions – money must have certain properties:

• the supply must be limited (i.e. it should be secured by goods and services – the term “substantial money” is used);

• it must be divisible into smaller units without loss of value,

• it must be easily portable,

• durable – for example, banknotes of a lower denomination remain in circulation for approximately 9 months, of higher denominations - even up to 11 years,

• difficult to forge.

In Poland, the monetary unit is the Polish zloty (symbol: PLN), since the denomination on January 1, 1995, we add „new”. This reform, defined as the „reform of the deletion of four zeros”, replaced 10,000 PLZ by 1 PLN.

Money is a basic element of the modern economy. Thanks to money, transactions can be more efficient and easy. It seems that money does not bring happiness, but it can certainly be said that the lack of money causes many complications and problems that make it difficult for us to achieve our life goals. Money must be treated as a means, a tool, and not as a value in itself. According to Robert Kyosaki, the author of many books on investing: „Money is not a goal. Money has no value. The value is in the dreams that money will help come true”.