Money - What is it?

A century ago, money was a pretty easy-to-define product. Many countries chose to back their money with hard-currency (gold bullion), giving money a relatively stable value. In an effort to bring more liquidity (and government control), money is now controlled somewhat arbitrarily by interest rates and direction injection by the Fed. The value of money is primarily determined by the money already out there, and then by those two factors.

Now, with paper bills representing only a fraction of the market, I ask:
What is money to you?
Is it even essential?
Who should control the money supply(should it be backed or not)?

I tried to make this as concise as possible, because the reality is that money... is quite a complex subject.

 

Money is what we make it. The paper bills we are using have no value what so ever, we gave them that value. Now gold, and other things like that is what is true value. Eh.. :\

 

Sythe is right in that it does have industrial applications mentioned, and there are certain cases where gold is a better alternative. But yes, for the large part, gold is worth so much from its rarity and perceived value - before there was good application to it, gold had been a currency throughout.

But the debate here isn't about gold, it's about money, what it is, and who should control it.

 

Money is just a medium of exchange; it's something that naturally comes out of a market as the accepted "middle product" so to speak. (Example: cigarettes in prisons)

Yes money is essential, as it finds a common ground for two people who want to exchange products.

 

Money is what we use to measure the economic value of something.

Essentially, when you have money, the government owes you the amount that it's worth in goods or services. Money is the government's property. It builds a stable economy. The value of money changes depending on many variables. Gold isn't money, it's a good. Goods can be traded for other goods or services. Money represents a debt owed by the government issuing the money to the person who owns the money and this makes it valuable. It's useful in trade because one can give that debt away to someone else for their goods or services.

 

Oops. Double post.

Sorry.

 

The way the world is now, With out money this world is fucked, So really if you dont have money you're screwed as well you'll never make it.

 

What is money to you?currency
Is it even essential?no
Who should control the money supply(should it be backed or not)?government for sure.

 

Gold is traded based on its assumed value not it's usefulness, the only other option is communism

 

Money is currency. Without currency, we would still be trading three sheep for a bull. Modern society needs money to make trade easier. Imagine going to the store and paying with flour, that wouldn't work.

And about the actual value of money:

"Everything is worth what its purchaser will pay for it."
- Publius Syrius

 

Its an interesting Subject to discuss, because really countries like iran and countries in africa and countries with valuable un tapped, non-renewable resources of valuable items like gold/oil/diamonds etc, the currency of those countries should be worth alot more then the currency of countries like america, because america has little to no resources left, i feel the concept of money won't be any good when the worlds none-renewable resources are almost dry and countries like america seek to use their *money* to buy more [without having anything to really add value to their money because they have nothing to really make there money worth anything] And countries like iran etc will become the most powerfull in the world :embar: Oh how the tables will turn.

 

The reason gold has value is because people want it. For what ever reason, they are willing to work for it. If i have 1 bar of gold, and you want my bar, and i want my bar, why should i give it to you? Because you can work for it.

 

The value of currency depends only on the amount of money they have in circulation. It's basic supply and demand. The more there is of something, the less valuable it becomes. Likewise, if something is rare and high in demand, the value will go up. If there is more currency in circulation, it will be worth less. If there is less currency in circulation, it will be worth more. The reason African and Middle-Eastern countries' currency is worth so little is because when they get into debt, they solve their problem by printing loads and loads of money. This is how the Zimbabwe dollar got so hyper-inflated that it took 100 billion dollars just to buy a bottle of beer. (http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe) It has nothing to do with natural resources.

A country can survive with absolutely no natural resources. If they produce a lot of goods and services, they don't actually have to harvest anything from the land. They can buy it all with the wealth they will generate by selling their goods and services. As long as they can produce something the rest of the world wants, a country will survive financially.

 

Exactly, the currency/money has to actually be worth something. Copper also bends too easily and will oxidize changing the colour of it... that can't be better then gold can it?


Money - It is controlled by 'People Power' in one sense but many other factors contribute to the control of the dollar. Interesting topic.

 

Money=Bullshit.
U.S. Currency anyways. Most of the money in the US isn't even backed up, so whats the point? Government should control it, but actually have control of it. And currency isn't necessary, yet it will never be eliminated.

 

Care to justify?

You might laugh at this, but let me tell you what the "In God We Trust" means on each bill. It's an interesting implication - the money isn't backed, so we have to fundamentally trust that our government won't crash.

So no, it's not physically backed - but you'll find the "physical" part of economics to be increasingly small.

 

Its what makes the world go round, with out it i think everyone would be screwed.

 

Why is that?

 

Yes, currency is necessary. It's a good that everyone will accept, therefore it can be traded for anything.

Imagine you have a car, and you want a boat instead. Now, you can either find someone who has a boat you want, who wants your car in exchange, OR you could trade your car for something that you could then trade for a boat. The former would be practically impossible, but luckily you can trade your car for money and then trade your money for a boat.

In reality, boats and cars are too complex to exist without a commonly accepted trade good to acquire the different parts needed, but for the sake of the argument let's say it would be possible.