Money Money Money…

This topic contains 2 replies, has 3 voices, and was last updated by JJS JJS 3 months, 1 week ago. This post has been viewed 282 times

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  • #86984

    williamthebold
    Participant

    It is fact that everything we produce has a ‘value’, related to the amount of work done to produce it.
    Raw materials have no value until harvested by us.
    It is also fact that we cannot do everything in life for ourselves.
    So to live effectively, we must exchange goods and services with others.
    When we trade goods and services, we exchange our items for others of corresponding value.
    in the past we did this by barter, by a direct exchange of items.
    But saying ‘I will give you two goats for one cow’, or ‘I will work for you for one week in exchange for…’, was not always practical and convenient.
    So a better way of trade was devised.

    A ‘value’ was given to items.
    This was related to the work done to produce them.
    This ‘value’ could be represented by a number of specialised metal disks. (coinage)
    The concept of money had arrived.
    The state issued these ‘coins’, and guaranteed their value.
    Trade could then be carried on almost anywhere, by giving the relevant number of coins for goods or services.
    Barter was still used, but, in practice, using coins was a better way of buying and selling.

    However, using money rather than barter does have disadvantages.
    It relies on a realistic value being applied to goods and services.
    This value can be misrepresented by unscrupulous persons.
    Money can also be stolen, and used by someone who has no right to it.
    In spite of these and other deficiencies, the system worked well enough for a long time.
    We also progressed to exchanging ‘value’ by other means.
    Along came paper money (bank notes) to add to the coins.
    Also, the transfer of credit became realistic.
    Credit represents money received for work done, and can conveniently be transferred by written word.
    Such credit was, and still is, a practical way of exchanging value to facilitate trade.
    Using a cheque is an example of this way. A bank transfer is another.
    But the principle behind all  buying and selling is the same.
    Everything has a value, and ownership can be traded using this value in money or credit.

    Using credit simplifies transactions, and saves the cost of producing coins and bank notes.
    Modern communication techniques allow us great freedom to trade in this way too.
    We can easily arrange for a ‘credit’ to be paid in to the account of a seller in exchange for goods.
    The seller could be almost anywhere in the world.
    We don’t need to be present to hand over physical money.
    All we need to have is a legitimate ‘credit’ in an account we own.
    The purchase of goods these days is more and more frequently effected by the transfer of credit rather than bank notes or coins.
    The only thing which remains the same is the physical exchange of the goods or services.

    But how much money or credit should be available in the community?
    The amount of money in circulation, or its equivalent in credit, must truly represent the  value of work done by the community.
    When the total money/credit is more than real work done, a country’s ‘currency’ is consequently of lower value.
    Also, regrettably, nefarious manipulation can be applied to credit systems.
    In spite of these drawbacks, we are trending quite rapidly away from the use of physical money.
    It is becoming less and less used in trade.
    To maintain the ease and convenience of trading with credit, we need to work around any difficulties which arise.
    But the trend is definitely to a ‘cashless’ society.
    Whilst this appears to be logical and sensible, it is only workable if we keep very strict control of how a ‘credit’ system is used.
    Controls already exist, but will need to be extended as credit continues to replace money.
    Difficulties will of be encountered, but we cannot have the benefit of using credit without some inconvenience?

    #86987

    Salina
    Participant

    I would like t know how bitcoin works. I’ve tried googling etc and still have no idea.

    #87003
    JJS
    JJS
    Participant
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