Money - it ... Money: the nature, types and functions

With the advent of the first production between people started exchanged.But not always possible to find the right amount of product for this operation.Money - is the equivalent of which was used in the commission of the exchange.

They can rightly be regarded as an achievement of mankind, because modern life without them is not.

Money and history

historically determined the exact time of the appearance of money.However, for the first time to hold the payment mentioned in the cuneiform silver around 2500 BC.After that, metal steel serve as a means of payment.Later, it was reflected in the appearance of the coins.

first money a diversity:

  • stone that were disks with a hole in the middle.They differ in diameter and is used for the exchange of goods, payment for services.
  • Metal - made of soft metals such as copper, which are not used in the production of weapons.
  • Salt - represents the bars of salt and used in some countries until the 20th century.
  • Cattle served at certain times of the monetary measure.Even herds could be considered equivalent during economic transactions.

Money in the form of coins were first used in the seventh century BC.They were a plate of metal of irregular shape, which depicted figure.He determines the cost of coins depending on the weight.

first paper money were recorded in China in 910 year.Their production was possible due to the advanced technology in the production of paper.

more widespread bills received after the invention of Gutenberg's printing press in 1440.Since then, paper money - a means used in the commission of any transactions.

theories of money

attracted many economists question of the origin of money.Economic theory distinguishes between two directions in the origin of money:

  • rationalist theory;
  • evolutionary theory.

The first is that the money - it is a product involved in the agreements between people.They are designed as a tool for the exchange and circulation of goods.For the first time such a thing has been described in the "Nicomachean Ethics", written by Aristotle.Philosopher wrote about the comparability of the goods involved in the exchange, and proposed to use for this particular unit of measurement - a coin.

American economist Samuelson regarded money as a socio-economic conditionality, created artificially.According to this theory, the money can be any item, endowed with certain functions and accepted in society.

Evolutionary theory considers the emergence of money as an inevitable process, which resulted in the release of some items.In the future society they occupied a special place.

Classics economics Ricardo and Smith and later Marx developed the idea that money - a commodity, and they were in the process of exchange.

essence of money in today's society money have a special status.They are an integral part of economic relations.For people money - this is good, that is, the ability to meet their needs.

essence of money is reflected in their participation:

  1. The reproduction, distribution, consumption and exchange.Money - the basis for the development of trade relations, they change with the development of metabolic processes.
  2. in the distribution of GDP, as well as the sale of land and real estate.Money - it is a means of distribution of wealth in society.
  3. in setting prices.The money represents the value of goods produced by man.

Also features the participation of cash in society, these signs have two characteristics:

  • Serve equivalent by universal exchange of goods.This feature is reflected in direct exchange for any product.In contrast to that in a barter and other products may be equivalent, but within mutual needs.
  • maintain the value of the goods.The best way to preserve it is just money, because at the same time reduces storage costs, and prevents loss of the goods.

Functions of money in today's economy, money does not have its own value, but retain exchangeable.This shows that the money - it's paper, which are inherent properties of the product.

Functions of money reflects the possibilities, features and role in economic life.Money act as:

  • measure of value.The function is implemented by setting the prices of goods.
  • medium of exchange.Banknotes are involved in the purchase and sale of goods.The calculation and the transfer of the goods produced at the same time.
  • means of payment.This function is implemented at the time of payment of the goods or services, payment of taxes, granting and repayment of loans, and others.
  • storage means.Money is not involved in the turnover, creating accumulation.
  • international means of payment (or world money).This feature is reflected in the use of money for settlements between countries.What is money?The function of the global means of payment performing currency backed by gold.For example, the dollar, euro, Japanese yen, pound sterling, Canadian dollar, Swiss franc and Australian dollar.

Types of money

Money - is the financial and economic category, which can be classified.They are divided into these types:

  1. Natural or real money.Often referred to as valid.This category includes all products that can serve as the equivalent of the exchange of money and precious metals.For example, the money - a silver and gold coins, livestock or grain.The cost of the face value of the money is real.
  2. Symbolic money.It marks the value which replace natural money.This category includes credit and paper money and electronic money - digital analogues of coins and banknotes.Their nominal value is higher than the real.

In today's developed countries, the advantage enjoyed non-cash payments and electronic money.They have a number of advantages, among which are the absence of costs of storage and transportation, as well as the impossibility of forgery or loss.

forecasts of leading economists say that in the future, electronic money does displace cash.

There are two forms of money: a smart card and network.The first - is electronic purses, analogue of credit card, but without the mediation through a bank.Network money is a software that lets you transfer funds according to the needs of man.

The characteristics of money

In the evolution of the money gained not only certain properties, but also its own features.These include:

  • compactness and portability - it's easy money transfer and use;
  • the cost - the money should be of value, cheap and readily available items can not be money;
  • amount - the money should have the ability to quantify the magnitude and calculus;
  • divisibility - signs must be easily divisible to payments of any kind;
  • deficit - the amount of money involved in the treatment must be less than the demand for them, in that situation would be a lot of money, and inflation will come;
  • acceptability - money - form of payment, which must be introduced in law.

quantity of circulating money signs

have a direct impact on the formation of prices for goods, works and services.Since the money - is the amount of cash located in the hands of the population and reserves of commercial banks, regulation of quantity of circulating money supply - the main method of exposure to a market economy.

Since in each country must be a certain amount of money which will correspond to the volume of production, trade and income, the amount of money in circulation can be determined by the equation:

m * V = P * T, where:

- m - money,involved in circulation;

- V - turnover rate of one unit;

- P - the general level of prices;

- T - the volume of trade transactions.

When the country there is equality, then ensure price stability.

If mV & lt;PT, the price of goods, works and services are reduced.If mV & gt;PT, the prices are rising and there are inflationary pressures.

On this basis, the main condition for the optimal quantity of money in circulation, it is the establishment of the state of price stability.

Monetary aggregates

money supply is divided, depending on the liquidity in the monetary aggregates M0, M1, M2, M3:

  1. all kinds of money that have a high degree of liquidity, are included in the aggregate M0 and include checks and cashMoney: M0 = H + H
  2. addition to the previous unit is M1, which adds to the bank account: M1 = M0 + B.
  3. next step to complement the previous ones, are funds that do not have absolute liquidity - deposits.This certificates of deposit, bonds, bills of exchange: M2 = M1 + B.
  4. last unit contains in its composition of government securities: M3 = M2 + CB.

This division into units allows the state to regulate the money supply and control inflation.

monetization ratio

important indicator by which to judge the state of the money supply is the monetization ratio, calculated by the formula:

Km = M2 / GDP, where:

- M2 - the relevant monetary aggregate,

- GDP -gross domestic product.

monetization ratio makes it possible to answer the question about whether there is enough money in circulation.On it you can judge how the GDP is provided with real money, in other words, how much a ruble GDP is money.

In economically developed countries, this rate can reach 0.6, and in some, and is close to 1. In Russia, this figure is slightly fit to 0.1.