Why do we have money?
When a doctor walks into a barbershop why does he not offer his medical services as compensation for a trim?
When a farmer needs to fuel up his truck why does he not offer some of his excess harvest in exchange for gasoline?
These are two examples of potential barter. Barter is the ultimate peer-to-peer interaction. No third parties - just direct exchange of value. People still do this occasionally within a community. I can negotiate to watch my neighbor's home while he travels to South America in exchange for him returning the favor when I go to Europe.
You may already see the problem. All of this disintermediation comes at a great cost. The double coincidence of wants is the name for the observation that what I want and what my counterparty has to offer rarely align perfectly. Even in the house-watching example my needs differ from my neighbor's across time. Meaning that if I watch his house I have to incur the additional risk that he may be unavailable or unwilling when I call upon him.
Humans are clever. We make technologies that make us more productive and our lives more enjoyable. Money is one such technology. Money solves the double coincidence of wants because it serves as a store of value that many people agree on. Like many tools - money is useful.
I have an idea for where I want to take this next but I am interested if anyone else has thoughts to this point they may be willing to share. Who knows - together we may get a result none of us anticipated. This is interactive community learning of the highest order.
Because to spend, it means you need money. Money you generate from an income. ... When it all boils down, money is an agreement in society, to represent value (because money itself has no real intrinsic value outside of the raw materials). Therefore, with money, you can exchange that value with something else of value.
Right on. You've hit upon a key point. Money is something you seek not for the sake of money but for what (you believe) it will enable you to possess in the future. Money is the intermediation between producers and consumers of goods and services.
Two observations.
people may slowly be coming to value money for its own sake. Many people will say they want to be a millionaire. Some may have the awareness to understand they are expressing a desire to be in a position to exchange that money for one million dollars worth of goods and services. But I am beginning to believe that some people actually do want money for money's sake. It may provide some psychic benefit for people to watch their bank statements grow or make sure their neighbor knows they figures of those bank statements. This is dangerous and inefficient because it prevents capital from flowing to its most valuable application.
How is it that we arrive on this shared consensus of valuable money? More interestingly how do we simultaneously maintain this shared delusion of value?
Look at steemsilvergold community. We accumulate money, not in its fiat form, but in the form of silver/gold. Is it dangerous and inefficient because it prevents capital from flowing to its most valuable application, as you said above?
No I do not think so. I think silver and metals are valuable commodities. The logic for their exchange is quite different. Commodities served (and continues to serve) a superb store of value through turbulent times.
@ronaldovelino. I think the scenario of a simple drying up of present supplies of metals is very possible. The mindset of a stacker or collector is almost always "more". This is an unsustainable attitude towards money itself because money is an instrument to secondary goods and services.
that's right.but it is frequently said that cash isn't the most essential thing on the planet. For some individuals, in any case, it is straight up there beside air in significance. These are not really excessively materialistic individuals. Or maybe, they basically comprehend the genuine estimation of cash. Cash, all by itself, isn't extremely stupendous.
You sir, have officially sparked the money neurons in my brain :-) Thanks for that.
Barter is the back bone of all functioning socioeconomic environments. Now it lies dormant (not dead) as we prefer to use tokens for the sake convenience.
In my mind these tokens have to two important components - first is the promise of value associated to it and secondly a legally binding agreement for it's universal acceptance. While the social behavior and choices determine the associated value, the legal guarantee of it's acceptance is provided by the political leadership.
It is my firm belief that what we lack today is the idea of store of value. Apart from Precious metals I find that everything tied to the modern banking system is based on trust in a system that has failed us too many times.
I am not talking about radical decision making here. What I am talking about is very a serious consideration into what we think of as money today - does it has the potential to safely store the value we put in it. Apart from blind trust of people, fiat holds no promise to me.
Well said. I have noticed that value is subjective. It depends on the applicable utility of a good. And fluctuates across time. Uranium may have value now - although it likely had little only 100 years ago.
An interesting question is: what is valuable in an information economy? A strong case can be made that the most valuable assets in such an environment are: information (clearly), connections, and networks. Perhaps it is unsurprising that businesses that deal in these areas are experiencing tremendous growth (facebook, linkedin, google).
This is interesting because it may offer each individual an opportunity to build value in previous impossible ways. Building stronger communities can create wealth not just for the initiator but eventually for the entire community.
My understanding is that historically information has been the currency of kings while the gold is the currency of rich and labor the currency of poor.
The group harnessing that power of information holds more favorable cards (as you state in you reply). Historically it has been the job of scholars to bring that power from the elite to the masses. To create a bridge, if you will, so that a healthy society flourishes.
That seems a wise statement. If true then scholars hold a deeply meaningful status in our society. For without knowledge we will surely run off course.
We don't necessarily need money, but we do have specific human needs. In today's modern countries, we provide for those needs with money. These needs are safety, food/water, and shelter.
If you could provide these needs without money, you wouldn't need it. In fact, there are many places in this world where they do not have currency. But, they still provide these needs.
Now, referring to our society - after the basic needs, our need for money is really an individual answer. The first step every person needs to do is look at their life and decide what truly makes them happy. Write out these specifics. Does a Mercedes really make you happy? Or does an annual vacation make you happy? Does quality time with your family make you happy? Go down the list and write it out.
Once you know what makes you happy, you can write a dollar amount next to it. A Mercedes will have a high one, a vacation can be cheap or extravagant (your choice), quality time may have a $0 next to it because it can be accomplished for free.
Now you know how much money you actually need. And now you have a purpose for pursuing money.
Too many of us pursue money without purpose. They are trying to get more money, but don't know why. And when they look back, they realize they worked for some things that didn't really make them happy. And, at the same time, neglected things that could have been achieved without money
Working to attain money itself is unwise. That is my observation as well - money has achieved such a revered role in modern capitalism that many may seek money out for the direct reasons (e.g. feeling relatively superior to one who has less) rather than the proper indirect reasons (e.g. goods and services it can buy). The point I am trying to make is that if money is a tool - then it follows that this sort of misuse of it is not only foolish - but it results in an inefficient allocation of capital and thus makes society less wealthy as a result . This is an unacceptable result in my estimation.
everyone says money is the 2nd god.what do you think sir @john-robert ?????
You're in for a big surprise when you start reading my posts... I have over 500 of them that I'm sure you'll be interested in reading... The money we use, such as Paper Money is only useful to measure Value... Wait until you see my last post about Coinage being a Tool to measure Value...
With money, You can exchange that value with something else of value. Money the thing which can develop us in our society and It also can increase your respectation if you the best.But it cannot do anything for that man who has not any good mind.
In a properly functioning society the flow of money can be seen as a measure of value creation. In an sick society money "sticks" in certain pockets and does not accurately represent the true value creation.
yes brother it is the truth. If we want to make money we should be a good person. it will help us to go ahead i think.
Thank you for your continued support of SteemSilverGold
Why do we have money?
I like the money, because we live in this world need something to meet the needs of the hitup and to satisfy our personal life.
for that we must have money and we will make money no matter how.
work and expertise are the key to making money.
Money is a Tool to Measure Value...
it is very true and very precise
Feel free to read a few of my posts... They will answer many questions...