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What is Money

    The Alleviation Presents JVZoo

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We all know what money is, which makes the title of this article rather odd. However, there is a bona fide reason for asking the question, "What is money?"

Most of us are so familiar with money that we fall into the trap of the unconscious incompetent. That's a person who not only does not know something but, still still, does not know that he does not know!

So, congratulations on stopping by here! By the time you finish reading this piece, you'll know a lot more than your friends!

What we'll do in this brief article is explore the three functions of money, learn about the three types of money used through history, and come to understand why correctly correcting it a prerequisite of becoming hugely successful in the emerging, managing and growing of money!

In ancient times, the hunter who best used the bow and arrow or who most certainly hurled the spear was a big – pardon the anachronism! – 'gun' in society. Later, that elevated position migrated to the farmer who understands how to coax a great harvest out of the earth. Then dawned the day of the industrialist who was adept at harnessing the economic inputs of land, labor and capital to create a valuable enterprise.

As society changed, the perceived value of some skills fell and that of others rose.

Today, in addition to needing to be knowledgeable and creative – because we live in what has often been christened the Knowledge Economy and the Idea Economy – the success seeker must understand what money is so he or she can harness its latent power to get important things done in our shrinking Global Village.

At the most basic level, money fulfils 3 functions:

1. Money is a medium of exchange;

2. Money is a standard of value; and

3. Money is a store of value.

Long ago, when the act of bartering became incrementally cumbersome, many different items were initially used as money; they included seashells, beads, tea, fishhooks, fur, cattle and even tobacco.

Then along came coins made of precious metals. Those coins became the first of 3 types of money – commodity money.

Later, when paper money was introduced, each note was effectively backed (or represented) by a certain amount of gold or silver kept elsewhere in a safe haven. This type of money was known as representative money.

Finally, with the explosion of the global money supply, it was inevitable that the value of a country's currency would end up becoming backed solely by confidence in the issuing government. This third – and current – type of money is called fiat money.

In today's world, an inability to handle money well dooms individuals to a lifetime of servitude in an economic system that seems intent on binding them up in self-encircled chains of debt.

On the other hand, those who understand how to harness the latent, amoral power of money are able to make it work for them.

Robert T. Kiyosaki, author of the phenomenal bestselling Rich Dad, Poor Dad book series has observed, "The poor and the middle class work for money; the rich have money work for them."

If you desire true economic success, it is vital that you learn how to have money work for you. In doing so, do not rush.

Remember you must learn to crawl before you can walk before you can even attempt the Olympic 100 meter sprint or 26-mile 385-yard marathon!

Happy reading, studying and applying. I wish you all the best in making money a great servant for yourself and your family in the years ahead.


Source by Raj Vitthalpura




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