How do animals survive without exchanging money when humans cannot?
WHAT IS MONEY?
What is a dollar worth? It's worth a dollar of course... but what the frack does that really mean? Here's the secret... it means whatever you want it to mean.
The dollar is a piece of paper that is sometimes worth a lot, and at other times may not be worth the paper it's printed on. The value of any currency is whatever people perceive it to be worth at that exact moment. It is only a "bearer instrument" used for trade and is based ENTIRELY on your trust in it's value.
If I'm selling bread, I might decide that my bread is worth a dollar per loaf. But the next day, I may decide it's worth two dollars a loaf. It's up to me what I charge, but it's also up to the BUYERS. If people decide that my bread tastes like ass, then suddenly my bread is worth precisely ZERO DOLLARS... to me or anyone else. Therefore, the value of ANYTHING is... exactly what people are willing to spend on that thing!
If I have a Snickers bar and someone offers me a dollar for it... SOLD. However, if I happen to be starving and the Snickers bar is the only food available, then that Snickers bar may be worth a hundred dollars... it may be worth a thousand dollars... or a million. Here's what you need to understand... the Snickers bar is the ‘wealth', NOT the dollars. The dollars are only instruments used for trade.
SO WHY DO WE HAVE MONEY ???
Coinage (and later paper money) were invented to make trade easier for people. Let's go back a few thousand years in history... before money. The tribal toolmaker shows up at the butcher's place. He offers the butcher a nice stone knife for a choice cut of mutton. Well, the butcher may already have all the stone knives he needs, so... no deal. The toolmaker now needs to find out what the butcher needs, then find a person who has that and is willing to trade for stone tools! Why? No "currency" as a means of trade. But again, the currency is only valued based on what people are willing to pay. If there was starvation among the tribe's people, then all the stone tools in the world aren't worth a bite of mutton. Likewise, if the tribe has 27 butchers, but only one toolmaker, then decent stone blades are worth a LOT of meat.
Because there's a fixed amount of DOLLARS out there, the value of a dollar therefore rises and falls based entirely on public perceptions. If we as a nation are busy little bees and produce lots of goods and services that the world actually wants, then the value of the dollar skyrockets. If we sit back and get fat and lazy, the value of the dollar plummets like a stone.
So what if we simply make more dollars? Would we create wealth? HELL NO. Again... dollars do not equal wealth, they are merely the instruments used to trade wealth between people. Therefore, if Obama decides he'll print dollars like crazy to pay off the incredible debt he's saddled us with, then all he's doing is doubling the amount of dollars out there... but cutting their VALUE in half... or worse. The actual amount of wealth hasn't changed just because he directs the mint to make more trade instruments.
Because of this, when governments don't understand basic economics, they make huge mistakes (like printing more money). Let's pretend you are a foolish little imbecile, and have your life savings (let's say $50,000) sitting in the bank. Obama decides tomorrow that it would be cool to simply print 20 trillion dollars in crisp new bills and pay off all our debts. Your life savings would still amount to exactly $50,000. However, you might then need that $50,000 to buy a Big Mac combo meal.
At about this point, you might think I'm exaggerating. However, history is rife with economies that collapsed into rampant inflation because they were run by idiots who knew nothing about economics and decided to print more money. As soon as people begin to lose confidence in a currency, that currency loses ALL it's value. It may as well be a pile of paper.
Only our confidence keeps the system going. It's the confidence that if we trade something for dollars, that we can then trade those dollars for something else of value later. As soon as we lose that confidence, we end up with $10,000 Snickers bars.