Throughout the centuries money has been one item that society shares whether they want to or not, because money allows society the greatest amount of flexibility in purchasing items. That flexibility allows for people to choose what they want to buy from any seller or to choose not to buy anything unless it is absolutely necessary. Certain money is better than other types of money, in the early days of the United States, we had a gold backed currency. While other nations don’t and their currency is weaker than other nations. Money is the most important commodity because, it allows for greater flexible in exchanges for individuals, it cuts down the knowledge barrier needed to make exchanges, and allows for stability is a sometimes unstable world.
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The object used for money was the item that had the most value for the society, Rome used salt, England used gold, the US used gold, and Ancient Egypt used cattle, the value of those items may not be worth much today. However in the time that they were currency that society viewed those items as worthy as a medium of exchange. Money is the means that we use to satisfy our needs, thus when society has money our needs can me satisfied and when it does not our needs cannot be satisfied. The value of the currency comes from a subjective valuation of the two people using and accepting the money. If a central bank is playing is overreaching in the value of money then that will distort the true value of money. Money that is played with cause the economy to limp from boom to bust in a regular pattern. The US saw this in 2001 with the Dot.Com crash, and then in 2008 with the housing bubble and the bank failures. In the …show more content…
If society was still using a direct exchange method then everybody would have to know what is the going rate for apples and oranges, cars for houses, and goods in exchange for labor services, direct exchanges would lead to stagnant economy. Stagnation in the economy as a whole leads to a lower standard of living for those in the economy, technological advancements will not happen at a ground breaking pace due to the cost of purchasing the necessary equipment, and the citizens will not get the most efficient use of their scarce resources. Direct exchanges come with a knowledge barrier that can only be cured if there is a fixed exchange rate between goods. With a stable monetary system it allows for indirect exchanges to occur, which will allow that knowledge issue to be resolved. Society would be able to increase its standard of living, be able to conduct technological advancements because it will be easy to raise the necessary funds to do research, and people will be able to get the most out of there scarce resources. Knowledge is the most important commodity in this world followed only by money, when people have the knowledge to conduct transactions then society will be able to move up the ladder. Stable money allows for that to happen because it does not distort the price signals, and the pricing signals allow us to coordinate knowledge to advance economic growth. Stable money is needed to allow people the greatest
The object used for money was the item that had the most value for the society, Rome used salt, England used gold, the US used gold, and Ancient Egypt used cattle, the value of those items may not be worth much today. However in the time that they were currency that society viewed those items as worthy as a medium of exchange. Money is the means that we use to satisfy our needs, thus when society has money our needs can me satisfied and when it does not our needs cannot be satisfied. The value of the currency comes from a subjective valuation of the two people using and accepting the money. If a central bank is playing is overreaching in the value of money then that will distort the true value of money. Money that is played with cause the economy to limp from boom to bust in a regular pattern. The US saw this in 2001 with the Dot.Com crash, and then in 2008 with the housing bubble and the bank failures. In the …show more content…
If society was still using a direct exchange method then everybody would have to know what is the going rate for apples and oranges, cars for houses, and goods in exchange for labor services, direct exchanges would lead to stagnant economy. Stagnation in the economy as a whole leads to a lower standard of living for those in the economy, technological advancements will not happen at a ground breaking pace due to the cost of purchasing the necessary equipment, and the citizens will not get the most efficient use of their scarce resources. Direct exchanges come with a knowledge barrier that can only be cured if there is a fixed exchange rate between goods. With a stable monetary system it allows for indirect exchanges to occur, which will allow that knowledge issue to be resolved. Society would be able to increase its standard of living, be able to conduct technological advancements because it will be easy to raise the necessary funds to do research, and people will be able to get the most out of there scarce resources. Knowledge is the most important commodity in this world followed only by money, when people have the knowledge to conduct transactions then society will be able to move up the ladder. Stable money allows for that to happen because it does not distort the price signals, and the pricing signals allow us to coordinate knowledge to advance economic growth. Stable money is needed to allow people the greatest