A Brief Look at 'Money'
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A Brief Look at 'Money'

Money is a storehouse of value and is used as a medium for exchange of goods and is a medium which is used by people all over the world. People save money for their future needs. Money serves a plethora of needs and services. It can serve as a medium of exchange for people when they want to buy new goods. In absence of the institution of money, there was the barter system. In the barter system, people used to exchange one good for another which he or she needed. This created lots of problems as it was difficult to find a match for every item needed.

Money is a storehouse of value and is used as a medium for exchange of goods and is a medium which is used by people all over the world. People save money for their future needs. Money serves a plethora of needs and services. It can serve as a medium of exchange for people when they want to buy new goods. In absence of the institution of money, there was the barter system. In the barter system, people used to exchange one good for another which he or she needed. This created lots of problems as it was difficult to find a match for every item needed.

Problems related to store of value of money

After the concept of money came, it used to be a problem to transport it from one place to another. As money consisted mainly of metal coins, it was difficult to transport them. Money was then stacked away in household and acted as a store of value. For kings, the money stored in the treasury acted as the store of value for measuring the wealth of their kingdom. The amount of money in the treasury acted as the measurement of value in the kingdom.

Gradually, money came to be in proper form. The system of barter system ceased to exist. People use money to buy their basic needs and necessities. People also save money in banks to increase their wealth. The wealth of a person is counted in terms of money. A person’s buildings and his assets are measured in terms of monetary value.

Modern trends and change in the function:

Nowadays, checks can also be considered money. The system of using checks signifies another way as to how money can be used as a storehouse of value. A person guarantees a fixed sum of money to another through a cheque. The cash is encashed by the other person who holds the cheque whenever he or she needs it.

There is also the facility of stocks. People invest their money in stock exchanges with the hope that their money’s worth would increase in the future after they invest in stocks. The stocks and their worth serve as a source of value for the people. It decides the amount of wealth they have. Often businessmen and entrepreneurs are judged on the amount of money they have in stocks. The stocks and their amount help determine the net worth of individuals, especially businessmen to a large extent.

In modern times, the concept of money has changed. People do not have to fear any more about transporting money from one place to another. Money can be transported from one country to another, through the help of banks without any problem. There are facilities like wire transfer which help people send money from one part of the world to another within a day or two. Then there are subsidiary services like Paypal which are actually not banks but help in transferring money to any part of the world. In the modern times, the concept of money has indeed gone for a drastic change. Each year, there is a rate of change of around 2-4% in the value of money at the least. This is why, the value of money that one gets for a certain sum at this point of time, would not be the same a few years from now.

Government approach

In today’s world, money is often counted in US Dollars, as it is the most widely accepted form of currency in the world. This is why; most of the valuable items in the world are measured in terms of US dollars rather than other currencies. US dollars is the currency still used for most international transactions and when dealing with other people around the world.

The value of money can depreciate within time too. Governments have the habit of continuing to increase the money supply in the market to suit the people’s growing needs. This, in effect, results in the depreciation of the value of money. Increased money supply in the market leads to the dilution of the value of money. The Government of many countries are trying their best to keep the value of money in check and avoid the deflation or inflation in their economies.

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