A symbol could be used to represent something of value that was available in physical storage somewhere else in ’’space’’, such as grain in the warehouse. Tallies:The acceptance of symbolic forms of money opened up vast new realms for human creativity. It was only a symbol for something of value. The warehouse receipt itself had no inherent value. Being much easier to carry, store and exchange than bags of grain, they were accepted in trade as a secure and more convenient form of payment, acting as a symbolic substitute for the quantities of food grain they represented. The receipts were backed and redeemable for a usable commodity.
Farmers deposited their surplus food grains for safe-keeping in royal or private warehouses and received in exchange written receipts for specific quantities of grain. Warehouse receipts became a very successful form of representative money in ancient Egypt during the reign of the Ptolemies around 330 BC. Socially, groups of people had to agree on the common usage of the same symbol. Psychologically, the individual had to transfer the sense of value from a usable material object to an abstract symbol. The adoption of representative money represented a significant evolution in human consciousness. This category includes the warehouse receipts issued by the ancient Egyptian grain banks, the goldsmith receipts issued by England’s goldsmith bankers, bills of exchange based on tradable goods, and more recent forms of paper currency that were backed by and redeemable for gold or silver. Representative money is symbolic money that is based on useful commodities. loaning out a physical monetary unit multiple times through fractional reserve sendingĬoins are produced by manufacturing metal in a factory called a mint.īanknotes and bank account balances are financial securities issued by a bank.The next stage in the evolution of money involved a further transition from money as an object with inherent usefulness and value to money as a pure symbol of value.physically manufacturing a new monetary unit, such as paper currency or metal coins.There are two different ways to create money: Money creation is the process by which money is produced or issued.
While a history of money may trace the origin and usage of different forms of money at different times and in different parts of the world, an evolutionary perspective on money traces the social and psychological changes in human attitude and collective behavior that made possible this historical development. As human consciousness has evolved, the nature and function of money has evolved too. Thus, all money has a psychological and a social as well as an economic dimension. The acceptance of any object as money – be it wampum, a gold coin, a paper currency note or a digital bank account balance – involves the consent of both the individual user and the community. Money is a symbol that represents the value of goods and services. The creation of money is made possible because human beings have the capacity to accord value to symbols. Money is central to the study of economics and forms its most cogent link to finance Money is not the same as real value, the latter being the basic element in economics. In modern economies, currency is the smallest component of the legal tender money supply. Money includes both currency, particularly the many circulating currencies with status, and various forms of financial deposit accounts, such as demand deposits, savings accounts, and certificates of deposit. Some authors explicitly require money to be a slandered of deferred payment Money is anything that is generally accepted in payment for goods and services and in repayment of debts The main uses of money are as a medium of exchange, a unit of account, and a store of value.