Foundation Path
Stage 7 of 10
On This Page
1. What is Money?
2. Types of Money
3. What is Inflation?
4. Why Inflation Happens
5. Why Inflation Matters
6. Crypto as a Response
7. What are Financial Markets?
8. How Markets Work
9. What Moves Markets?
10. Crypto vs Traditional Markets
11. The Big Picture
Key Takeaways
• Money is a tool for storing and exchanging value
• Inflation reduces purchasing power
• Financial markets determine asset prices
• Crypto exists partly as a response to inflation
• Macro forces affect all markets
Lesson
7.1
Money, Inflation & Financial Markets
What You’ll Learn
• What money actually is
• How inflation works
• How financial markets function
• Why crypto exists in the first place
• How all of this connects together
What is Money?
Money is a tool used to store value and exchange goods/services
Money has 3 main functions:
1. Medium of Exchange
Used to buy things
2. Store of Value
Keeps value over time
3. Unit of Account
Measures value (prices)
👉 Example:
$10 = price of a product
Types of Money
Fiat Money
Government-issued
Example: USD, EUR
👉 Not backed by physical assets
Hard Money
Limited supply
Hard to produce
👉 Example:
Gold
Bitcoin
👉 Key difference:
Type | Supply |
Fiat | Unlimited |
Hard Money | Limited |
What is Inflation?
Inflation = decrease in purchasing power of money
Simple Example:
Today: $10 buys a meal
Future: $10 buys less
👉 Prices go up → value of money goes down
Why Inflation Happens
1. Money Printing
Governments increase supply
2. Demand vs Supply
More demand → higher prices
3. Economic Growth
More spending → inflation pressure
👉 Key idea:
More money in the system = less value per unit
Why Inflation Matters
It reduces your savings value
It pushes people to invest
It drives asset prices higher
👉 Important:
Inflation is one reason crypto exists
Crypto as a Response
Example:
Bitcoin has fixed supply
👉 Designed to:
Resist inflation
Act as “digital gold”
👉 Key idea:
Limited supply = potential store of value
What are Financial Markets?
Places where assets are bought and sold
Types of Markets:
Stock Market
Companies (stocks)
Crypto Market
Digital assets
Bond Market
Debt instruments
Commodity Market
Gold, oil, etc.
How Markets Work
Buyers vs Sellers
Buyers push prices up
Sellers push prices down
👉 Price = balance of demand and supply
What Moves Markets?
1. Liquidity
More money → higher prices
2. Sentiment
Fear vs greed
3. Interest Rates
Set by central banks
4. Global Events
Crises, policies, news
👉 Key idea:
Markets are driven by both logic AND emotion
Crypto vs Traditional Markets
Feature | Traditional Markets | Crypto |
Hours | Limited | 24/7 |
Regulation | High | Lower |
Volatility | Lower | Higher |
Access | Restricted | Open |
👉 Crypto is:
Faster, riskier, and more accessible
The Big Picture
How Everything Connects:
Governments print money
Inflation rises
People seek better stores of value
Assets (stocks, crypto) increase
👉 This is why:
Crypto is tied to global finance
Key Insight
You’re not just investing in crypto…you’re participating in a global financial system
How This Connects to Your Journey
Research Analysts → understand macro impact
Market Analysts → analyze market behavior
DeFi Operators → position capital
Next Step
👉 Continue to:
“Compound Interest”
Optional Mission
👉 Think about this:
Would you rather hold cash or assets during inflation? Why?
Final Thought
If you understand money…you understand the game.