Money is one of the most basic and abstract concepts in the modern world. It is “the language of markets,” as Henry Ford once said, and it is, in fact, the language of exchange. Basically, money is a generally accepted physical object or account that is usually accepted as payment for some goods and / or services and for debt repayment, including taxes, in a particular social context. Historically, money has always been a very important part of human existence … and maybe more since the advent of money.
In the past, money was created primarily through barter, that is, through barter that sells his products to the buyer for what the buyer had previously bought. This money creation process has been the same throughout history. However, the money was generally not considered legal tender, which meant that the government did not want to issue sovereign coins (except for the Hawaiian Islands). This deficiency in the monetary system was remedied by the introduction of fiat money (Fiat).
Paper money generally consists of coins owned by individuals or corporations and issued by governments. Paper money generally has no inherent properties that distinguish it from other forms of money. Paper money is issued by governments in contrast to debt instruments or share certificates and can be freely traded in any market. There are two types of paper money: regular money and Fiat commercial bank money.
Shared funds are created by operating commercial banks. To operate a business, commercial banks must maintain a certain balance between their assets and liabilities. Any change in the balance between these two factors will lead to a change in the amount of cash that the bank must keep in its possession. This is how commercial banks obtain their paper money reserves.
The problem with this type of cash supply is that it is largely controlled by a few select banks that make the most of the issuance. Issuing banks can only spend money on transaction costs. Third parties are not permitted to interfere. Because of this limitation and because there is a lack of hard money power properties, commercial bank money is completely worthless.
Paper money, on the other hand, is a much higher form of money. It is widely accepted throughout the country on a voluntary basis for commercial purposes. It is released in quantities that can be used as soon as it is needed. It is easy to exchange paper money for similar commodity money, as the two types of money are generally accepted for the same purpose in different locations across the country.
One could argue that gold and silver coins would make more sense for trading purposes, but let’s look at a simpler example. Adopted, the province needs to repair the drainage infrastructure. To achieve this, precious metals are used (in this case gold). Because the metal is readily available (or somewhat inexpensive), the county can easily sell gold for spot money, creating the money it needs to fix exchange problems.
It is clear that the value of raw materials has nothing to do with market prices and everything related to their intrinsic value. So it goes with the money. A country’s total debt, whether it owes itself or its creditors, has nothing to do with its trading position and everything related to the intrinsic value of its gold and silver coins. If you are using gold and silver coins as money for your personal consumption, then it is clear that you will be wasting your money. Why make all these difficulties when you don’t have to?