Money (Part 1 of 2)

Money will not make you happy, and happy will not make you money.
Groucho Marx

On this time, from Steering Bird, online advisers in business direction and management, we we talk about money.

Money is every good or asset that is accepted as a means of payment by economic agents to make exchanges. Throughout history, elements as diverse as shells, stones, salt, pepper, clay plates, metals, etc. have been used as money. Today, coins and bills in circulation are the best-known form of money, both physical and virtual.

Types of Money

Gold is money, everything else is credit.
J.P. Morgan

Money has changed a lot since its beginning. From the point of view of the origin of its value, there are some classifications about types of money, among which are:

  1. Commodity Money. It is money whose value originates in the good or commodity that composes it. This money is based in commodities that have value by themselves.
  2. Representative Money. It is money whose value is not based on itself, but, on another good, such as metals such as gold, silver and bronzes. This money is able to be converted into the good that represents it
  3. Fiduciary Money. It is money that is based on the faith or trust of society. It is not backed by metals or any other good, but is backed only by a promise of payment by the issuing entity
  4. Fiat Money. It is the money by government order, without intrinsic value, but coming from a declaration of money made by the State. It differs from fiduciary money in that fiat money responds to a legal imposition of the government that administers it, while fiduciary money is associated with the trust you have to be accepted by economic agents. Examples of this are the euro (EUR), the US dollar (USD) and the yen (JPY)
We are Steering Bird, online advisers in direction, management and finance. We specialize in business analysis, control and analysis of investment projects, results analysis, processes of budget and forecast, etc. Contact us if you need help. We invite you to learn about our services and read our articles.

Go to the article:

Money (part 2)

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