An Italian Professor Of Economics Essays

833 Words Mar 3rd, 2016 4 Pages
Augusto Graziani, an Italian Professor of Economics understood what money is by answering how a monetary economy differs from one in which trade occurs through bartering. Based on this, gold cannot be money since it is basically a commodity and an economy using gold for trade is a barter economy as compared to a monetary one. This being said explains how those who say we would be better off going back to gold are really saying that they do not like a monetary economy and think we would be better off in a barter economy instead. Grazianai gave three basic conditions that had to be met for something to be called money: “ a) money has to be a token currency (otherwise it would give rise to barter and not to monetary exchanges); b) money has to be accepted as a means of final settlement of the transaction (otherwise it would be credit and not money); c) money must not grant privileges of seigniorage to any agent making a payment” (Keen). Graziani determined there was only one way to satisfy all three conditions and that was to have the payments made by means of promises of a third agent like a bank. Money is fundamentally the promise of a bank to its customers and a monetary payment is the transfer of that promise from one customer to another.
This analysis of money can play a crucial role when predict the future of the U.S. economy. One must understand what money is, where it came from, its purpose, and its effect on the economy before you can possibly foresee what will boost…

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