What is Money?
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Three general stages of money historically
Commodity money
The more complex an economy becomes, the greater the number of possible combinations of barter you can have between different types of goods and services providers, so the economy starts requiring some standard unit of account, or money.
Money makes things more efficient, the apple farmer doesn’t need to find a doctor in search for apples if he’s in trouble.
In the Austrian school of economics, commodity money should be:
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Divisible: to account for various purchase sizes.
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Portable.
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Durable through time.
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Fungible: individual units don’t differ.
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Scarce: money supply does not suddenly change.
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Utility: has some sort of aesthetic value or something a society considers intrinsically valuable.
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Currency is defined as a liability to an institution and acts as a medium of exchange and unit of account
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Money is separate from a liability, it’s fungible, liquid and a highly salable good.
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Unlike a dollar, which is an asset to you but a liability of some other entity, you can hold gold which is an asset to you and a liability to nobody else.
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Under the gold standard, currency was a claim for money (gold).
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Scarcity is largely what determines the commodity money. The stock-to-flow ratio measures how much of something there currently is (its stock) to how much supply (increase or decrease) to this stock can occur in a year.
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Golds stf ratio is 67, meaning that current gold stock is 67 years of annual production.
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Rai stones was an early example of a ledger. The biggest stones owners were know through oral tradition, transfer of the stone was passed down orally.
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Technological asymmetries meant that for these primitive commodity monies locals were trading something valuable for something less valuable over time.
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The notion of the petroldollar, that the US made a deal with Saudi Arabia that all oil is priced in dollars creating a general global demand for dollars.
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This caused the US currency to be very strong so imports increased and the US has been running more and more of a deficit ever since (some evidence for the existence of this system).