The first part of this two-part blog, published last month, explored the fundamental ideas of money. Here are some key things to bear in mind as we continue our exploration of this endlessly fascinating subject.
- Money is a universal token (metal coins and paper bills) having a value that is expected, but not guaranteed, to be stable over time and is trusted by the people. This trust is usually established by a national government issuing and standing behind its currency (dollars, euros, francs, kroners, pounds, pesos, etc.).
- Money is a great facilitator of exchange transactions (buying and selling), the core of commerce.
- Money has no intrinsic value. Even when money is equated with silver or gold, the value of money can fluctuate with the prices of these metals.
- Money must move quickly and seamlessly from one place to another in today’s largely integrated worldwide society, which was not previously the case in local, largely isolated agricultural societies.
In short, to a large extent, the legitimacy and value of money is whatever a national government says it is.Continue reading Extraordinary Ordinary Things: Credit cards and beyond