Basics of Money



Important Points Regarding the Origins of Money
Some of the points to note are:

  • Money did not have a single origin but developed independently in many different parts of the world.

  • Many factors contributed to the development of money. This is evident from what anthropologists have learnt about the primitive money in primitive societies.

  • Money performs many types of functions. The function of money in the earliest types of society were restricted initially and not necessarily the same in all societies.

  • Money was fungible. That is, old forms of money took on new roles and new forms of money were developed to replace what the older role was.


Functions of Money
Specific functions are:

  1. As a unit of account.
  2. Common measure of value.
  3. As a medium of exchange.
  4. As a means of payment.
  5. A standard for deferred payment.
  6. A store of value.
  7. A liquid asset.
  8. Was the framework of the market system (prices).
  9. Was a controller of the economy?

The list above may not have been the first or original functions because what may have been a secondary or derived function in one place may have been the original giving rise to a related secondary function in another place. The listing of the functions above implies no priority in neither time nor importance.


Our Love of Money
Most of us fantasise about having a lot of money and we dream about what we would do if we had a great deal of money. By focusing on the money aspect of our dreams we can usually wind up giving control of our future to the outside force of money. When the lack of money is seen as a deterrent to living a happy and joyous life, it becomes an adversary. That is, something to struggle against and blame for our misfortune. Money is nothing until we empower it with our thoughts and beliefs. It is only when we believe that money has value, that we are willing to work for it. Once we understand what money can do for us, we put in extra effort and energy in order to obtain more of it.

We begin to see its power and the effect it has over everyone. We then start to get a love for this product called money. The power and need for money starts within. We are then in a position to take back control and use our beliefs and actions about money to produce more money with the minimum amount of effort as possible. This puts us in a position where we soon find that our money works harder and makes us more money than we earn.

Simply put, it means the poor work for money while money works for the rich.


Money and Value
It is important to distinguish money from value. Money is the nice paper stuff that we keep in our wallet. It is also the numbers in our bank account and is used for the purpose of exchanging goods. Wealth however, is anything that humans value. These can include houses, land, jewellery, artwork etc. It is important to understand that money and value are not the same thing.

We can’t treat money as if it has no intrinsic value. The value of any object is exactly what someone else is prepared to pay for it. That is, the value of the object is established by people wanting that particular object and the value is not intrinsic to the object itself.

A farmer has a different value for a load of manure than the lawyer in his plush office. Anyone who sets up to produce more money will have the government on their back very quickly. Governments produce money at will and with that money they are able to buy goods for the mere price of the printed paper.

The paper they produce has no intrinsic value but it can be exchanged for gold or other substantial assets. Despite myths to the contrary, there is no reason why any person cannot produce a more reliable money backed by gold or by a basket of commodities. The only factor that will stand in their way is the power of the state. The power of the state would not reluctantly yield.