How much money is there? Where does money come from? Who controls it? You might find yourself asking these questions after reading this article. You see, money is on many people’s minds these days. And if you’re like me, you probably wonder why the world is in debt and always seems to be running out of money.
Definition of Money
Money is a medium of exchange, a store of value, a unit of account, and a standard of deferred payment. We use money to buy stuff from each other instead of bartering. We can count on its ability to function as a medium of exchange that allows us to accumulate it and use it as a store of value or wealth.
A unit of account is what economists call something used to measure economic value. A standard of deferred payment means that you get paid with money instead of chickens or potatoes or whatever else when you work. You’re willing to accept payment in future dollars because you know you use them later to buy stuff from someone else. For instance, you can use money at an online casino if you want to play mega moolah nz. You deposit the money and get to enjoy your game!
History of Money
The origins of money are lost in the mists of time, but most historians agree that it came into existence due to trade and commerce. Since the beginning of human civilization, people have been trading things. At first, they did this by bartering – exchanging one thing for another.
This is where money comes in, acting as a universal medium of exchange that can be used to buy almost anything. The earliest recorded form of money was grain – people would exchange a bushel of wheat for another commodity or service they needed. As society became more sophisticated and trade between different peoples increased, finding light, durable, and easy-to-carry items became necessary.
It wasn’t until around 3000 B.C. that Ancient Egypt started using metal coins made from gold and silver, manufactured by the King and stamped with his likeness to show authenticity. This process was continued through various civilizations, including Ancient Greece and Rome, where they minted precious metals into coins.
Where Does Money Come From?
Fifty years ago, people would have told you the government made that money. Today, not so much. If you ask people where the money comes from, they’ll let you know the banks make it.
The situation is more complex than either of these answers suggest. In the United States, money is created through a joint effort of the federal government and private banks.
The Federal Reserve and Banks create money through loans. The Federal Reserve supervises and regulates banks to ensure they’re financially healthy and don’t misuse our money. When a bank makes a loan, it creates new money as both principal and interest are paid back to the bank with interest. This new money enters circulation through borrowers’ spending.
The same thing happens when a bank issues a credit card or home equity line of credit. These things are loans, so both create new money as they are repaid with interest over time. Banks don’t simply lend out deposits that are placed with them. A lot of the money to pay back loans comes from new loans!
How Much Money is There in the World?
While there’s no exact answer to this question, economists have a good idea of how much money exists. This is because they can look at the numbers.
There are several reasons why this number is so hard to nail down. First, it’s not always easy to tell whether something is money or not (i.e., it depends on who is doing the counting). Second, some things might count as money for one person but not for another. For instance, a rich person’s luxury car might be worth more than $1 million!
Finally, most people think of “money” as only being cash and coins. But there are also things like stocks, bonds, and other investments that count as money! All this opacity in the financial market has pushed investors look for alternatives, such as investing in gold.
Summing Up
Money is just a social construct, after all. We don’t need to think of it as something that only exists in the physical world. Our bank accounts, stocks and bonds and other measures of wealth all rely on our faith that money is real and will always be there, somewhere in cyberspace. This has traditionally been a point of contention for governments. They have found that their ability to control and print money makes them an attractive target for people hoping to directly influence the economy for their own benefit.
