frankthetank wrote:Backed by gold??? Just wondering if there were any out there...
hmbjeff wrote:This is not a troll, I really would like to know.
frankthetank wrote:Backed by gold??? Just wondering if there were any out there...
Money is an agreement, between a community, to use something as a medium of exchange, which acts as an intermediary market good. It can be traded and exchanged for other goods. The agreement can either be explicit or implicit, freely chosen, or coerced. Money is an abstract form of power. As discussed below, money also has other characteristics.
Money itself must be a scarce good. Essential characteristics of money Money has the following three characteristics:
1. It must be a medium of exchange
When an object is in demand primarily for its use in exchange -- for its ability to be used in trade to exchange for other things -- then it has this property.
This characteristic allows money to be a standard of deferred payment, i.e., a tool for the payment of debt.
2. It must be a unit of account
When the value of a good is frequently used to measure or compare the value of other goods or where its value is used to denominate debts then it is functioning as a unit of account.
A debt or an IOU can not serve as a unit of account because its value is specified by comparison to some external reference value, some actual unit of account that may be used for settlement.
For example, if in some culture people are inclined to measure the worth of things with reference to goats then we would regard goats as the dominant unit of account in that culture. For instance we may say that today a horse is worth 10 goats and a good hut is worth 45 goats. We would also say that an IOU denominated in goats would change value at much the same rate as real goats.
3. It must be a store of value
When an object is purchased primarily to store value for future trade then it is being used as a store of value. For example, a sawmill might maintain an inventory of lumber that has market value. Likewise it might keep a cash box that has some currency that holds market value. Both would represent a store of value because through trade they can be reliably converted to other goods at some future date. Most non-perishable goods have this quality.
Many goods or tokens have some of the characteristics outlined above. However no good or token is money unless it can satisfy all three criteria.
MrGresham wrote: Let's see if I can recall the five main characteristics of money, off the top, right now: --snip-- So, WHICH bottle of alcohol will you specify in your contracts?
Leanan wrote:Crash as in Argentina-style collapse. Where stores post prices three or four times a day, because inflation is so high. Where people rush to the store on payday to spend their entire check, because it will be worth less in a few hours. Where, instead of bringing your money in your pocket and taking your purchases home in a wheelbarrow, you bring your money in a wheelbarrow and take your purchases home in your pocket.
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