In simple words money is a medium exchange in form of coins or currency note that buys us things this is called Fiat money or physical money… we put money in our wallet and can buy anything which is affordable or is in our range. But in economics terms, money does not mean only currency notes, rather anything which buys us something or which has purchasing power ability. Money is printed in central bank of any country and has become the most important part of every day’s life. It is a fact that as the time is moving on; its importance is getting stronger.
1. Origin of the word “money”
The word “money” is said to be derived from a roman temple named “Hera”. The word Hera was used there for money. Another group of historians say that it is derived from the word “Moneta” which was also the name of a roman temple.
2. History of money
History says that for the first time man used money in about 3000 BC. In that time barley was the name of currency. Soon this concept of keeping money was spread all over the world.
3. Barter vs. money
Before money barter system was used to “buy” things for example if you need rice and you grow wheat then you would have to first find a person who grows rice and wants wheat. This sounds a really tiring and tough job! Whereas in a monetary system you just have to have money in your pockets and you can have whatsoever you want.
4. Evolution of money
The tiresome work of barter system became the main factor for evolution of money. People started thinking to find an easy way to exchange goods and services. So in 3000 BC first currency named barley came into market and monetary system started.
5. Main property of money
Main property of money should be that it should be generally acceptable by the people. An interesting story about this argument is that after World War 2, in jails, cigarettes were used as money!
6. functions of money
There are three main functions of money
A: medium of exchange: It should be capable for exchange of everything.
B: Store of value: It should consider the market value of goods and services.
C: Unit of account: it should be kept without spending it.
7. Purposes of holding money
Money can be held for several needs like unforeseen needs, speculation or for transaction purpose.
8. Types of money
There are many types of money like in ancient times gold and silver coins were called money then paper currency that was backed by the gold came and replaced the coins. Now a day’s credit, golden and debit cards are being used as money.
9. People’s views about money
Though money can buy anything but majority of people think that as it buys only material things so it can’t be said that it makes you happy.
10. Money and disparities in the world
A recent study of World Bank says that the top richest 20% people hold the 80% money and recourse wealth of entire world. Other 80% people share only 20% of the world’s wealth, power and money.