Once upon a time on a planet not very far away...
There was a street next to a pile of stones. I forget whether the stones were there to repel foreign invaders or to channel irrigation water, but it was a high and long wall. So they called the street Wall Street. And all the people of the village would gather there to exchange their goods. You see, after generations of making everything for themselves, the villagers figured out, one by one, that they would be better off if they made (or grew or hunted) something they they were good at and exchanged it for something someone else was better at producing. Igor was good at hunting rabbits, so he dedicated himself full-time to hunting rabbits and brought them to market and exchanged them for carrots raised by Uk. That way both Igor and Uk had more rabbits and more carrots than either of them would have had if they had had to produce them all by themselves. Aggar had a talent for spinning wool, so she did that and exchanged with Kolo, who was good chopping firewood. Aurel had a problem, though. He was the best ox-breeder in the village, but every time he brought a unit of production to market, he had to butcher it right there and exchange the meat for different products of others, or go home without exchanging with anyone. Even when he did butcher the animal, he couldn't always find traders for the whole result, so much of it spoiled. He hadn't gone to an ivy-league university, but something told him intuitively, instinctively, that one ox ought to exchange for more than a pound of carrots or one rabbit. But he didn't need a hundred rabbits or 500 pounds of carrots at a time; he needed a broader variety of goods, but a barter system was a very clumsy way to obtain it.
Yag liked to dig, and he found a yellow metal in the ground. He brought the metal to market and exchanged it for other goods. People gave him rabbits, carrots, wool and even oxen for his yellow metal because it was beautiful, could be used to decorate household items as well as the persons themselves, fill tooth cavities and manufacture electronic microprocessor components. Best of all, it was soft, heavy and malleable; it could be cut to just the size/weight/amount needed in the moment and a small amount was highly valuable. Even those people who had no use for the gold themselves figured out that they could exchange their goods for gold, then exchange the gold for something else they really did need. Not everyone needed a rabbit or a carrot every day, but almost anyone would be willing to accept gold in exchange if the amount were right. Money was born.
Droughts, pestilence, floods, earthquakes and hurricanes were a big problem. Whenever such a disaster hit, it would wipe out all the goods anyone had and there would be nothing to exchange or eat. So Beul invented the weather-proof warehouse, and charged the other villagers a fee (in gold) to store their goods safely. But even without droughts, floods et al, some goods couldn't be stored for long without spoiling. Gold, on the other hand could keep virtually forever, but this virtue created problems of its own. If one accumulated more gold than needed for a short period (a day, a week, a month) then it would be too inconvenient to carry around and too dangerous to leave at one's house. Still, people wanted to save wealth so that they could be assured of having resources, food and clothing in the future, even if they couldn't hunt, farm or spin then. So Beul expanded his business and offered to let people store their gold in his warehouse. Initially he put each customer's gold into individual safe-deposit boxes and gave them a piece of papyrus with their name on it and a number matching the number on the box, so that the customer could claim his or her gold later. But very quickly he realized that gold was fungible, that is, that it didn't matter which gold went to which customer, as long as the quantity matched the number on the receipt. So he kept all the gold together (which was more convenient) and handed out receipts, which he called dollars, with a specified amount and the picture of a dead president, king, foreign plenipotentiary or other dignitary on them. When people needed their gold, they came back to the gold warehouse and exchanged some of their receipts for gold. If they had more gold than they had immediate need for, they took the excess gold to the warehouse and got more receipts.
But then another funny thing happened. People started using the receipts themselves as if they were gold. They started exchanging rabbits, carrots, oxen and wool for the papyrus receipts. They knew they could always exchange the receipts for the real gold any time, but since it was so easy to carry around the papyrus instead of the metal, most of the latter remained in the warehouse most of the time. Ogmo came up with another idea. Through his trading and saving, he acquired a significant number of receipts for gold, more than he needed for his immediate consumption. So he allowed other people to borrow them and use them, as long as they promised to return them all, plus a few more, in a year's time. Financial credit was born.
The whole thing functioned quite well until one day Beul got a sneaky idea. He was running low on wealth of his own. He had a warehouse full of rabbits, carrots, wool and gold, but none of that really belonged to him; it belonged to the customers who held the receipts. His only claim was to the warehousing fees charged for his services. The goods themselves were not his. But he disregarded moral principle and... wrote himself a receipt for gold, in an amount equivalent to 1% of the total gold in the warehouse. And he went into the market to buy rabbits, carrots, wool and oxen. What's the harm? he thought to himself. He realized that if everyone demanded their gold at once, he would be seriously short and the villagers would kill him. But, he thought, no one will notice, because never does everyone need their gold all at once. The receipts have taken a life of their own as the de facto money of the market.
But this original fraud did have an effect. Since Beul had the extra receipts first, he could buy goods which would have been bought by others. Incrementally, he bid goods away from other buyers, and the gold-receipt price of everything in the market started to creep up... by about 1%. Beul got addicted to his easy wealth. He continued to write counterfeit receipts to gold for his own use and spend them, first 2%, then 5%, then 10% of the total gold store. When the gold-reciept price level in the market reached 15% higher than its original level, more and more people started returning their receipts to the warehouse in exchange for real gold. Since there was now less gold in the warehouse, Beul's fraudulent receipts had a proportionately higher distortion effect on the market. Finally, when prices reached 50% higher than the original level, there was a run; EVERYONE who held a receipt for gold in Beul's warehouse demanded the gold. But by now, for every 3 receipts in the market, there were only 2 units of gold in the warehouse. Beul could not honor all of the promises. The villagers then realized how Beul had achieved his lavish lifestyle. They were compasionate; they sent him for rehabilitative therapy in the cave of the scorpions, vipers and smallpox.