The Basics of Money
What is Money?
The answer to the question is simple. Money is anything
widely used for paying debts owed by a person to someone
else and also for receiving the payments of debts
owing to a person from someone else. A country produces
coins and banknotes, (accepted by everyone) for the
payment of bills and for the receipt of money owing.
Money is what is known as a "medium
of exchange".
In the "old days" people traded the goods and services
they owned (and probably produced) for goods and services
owned by others (probably produced by them). The scenario
went something like this - "you give me two sacks
of your potatoes and I will trade you ten of my fish".
This method of trading was fine for
a while. As society developed, business became more
cumbersome and inefficient with this method of trade.
Business dealings became stilted and slow and lagged
behind the new pace of commerce. There had to be a
better way. Some bright spark then came up with the
idea of a common "medium of exchange" easier to carry
around and better to use.
Money was born.
It wasn't that simple, because while all sorts of
things were used as a medium of exchange, these were
all basically called "money" and it wasn't until coins
and paper notes were developed that money as we know
it today became the standard accepted as a medium
of exchange.
Forms of Money
There are various forms of money - cheques, IOU's,
credit cards, bank drafts or gold. Gold was the standard
used in the past because of its scarcity and its qualities.
Gold is resistant to corrosion or damage. These unique
properties, as well as the scarcity of gold means
that even today, wealthy people around the world would
rather keep their wealth in gold holdings than in
the currencies of countries which are subject to inflation.
In fact, all sorts of things have been
used as money throughout the ages. Some include: beads,
eggs, salt, pigs, leather, yarn, axes, ivory and jade.
Today we have another form of money, which cannot
be touched, and yet it as real as the tangible coins
we are able to touch. This form of money is electronic
money.
The Name "Money"
The word money comes from the Roman goddess - Moneta.
Apparently coins were minted in her temples and issued
to the world, as the Romans knew it at the time. The
Latin word "Moneta", (meaning mint or coins) came
from the old English word "mynet" (meaning coins or
money) and from this came the English word "mint".
Origins of Money
To understand the origins of money we have to go back
to a time well before money came on the scene. Money
did not suddenly appear - it was introduced gradually
in response to the requirements of human needs. As
civilization grew and expanded beyond local societies,
the need to exchange the products provided by various
groups became evident. The hunter needed to exchange
with the farmer, the shepherd needed to exchange with
the medicine man etc.
The medium of exchange that was necessary
to enable the various groups to barter and swap their
products was money. It was originally a physical substance
like gold or silver. Sometimes it was a substance
that was alive such as cattle, which was one of the
oldest forms of money.
Today, although much of the money used
by individuals in their everyday life is still in
the form of notes and coins, its quantity is relatively
small compared to the intangible types of money existing
as entries in bank records.
Today money exists in the form of digital
cash and such things as coins and bank notes will
soon become obsolete. When this happens, the change
in the nature of money will have a significant effect
on our society.
Copyright 2005 StartRunGrow
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StartRunGrow (http://www
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