US Money Chapter 3 – Money Fundamentals


Money Fundamentals 3.13 Not money: sharing, gifts & barter (2)

To avoid confusion, it is helpful to clear away what money is not. Sharing, gifts and barter are not money systems – they are resource exchange systems. Sharing and gifts Giving one’s surplus to those in need is one way…

Money Fundamentals 3.14 Roots – an early history of money (2)

An abstract, social innovation Money is a profound and extraordinary social innovation. Like language, it is abstract and social, with physical aspects (currency in the case of money, and spoken or written in the case of…

Money Fundamentals 3.15 Money is as money does – money functions: tool, measure, store of value (2)

Money is a tool Money is a social technology that makes it easy to exchange goods, services, property and value. Money circulates, facilitating millions of exchanges every second of every day. A single unit of money can …

Money Fundamentals 3.16 Money paradox: wealth and/or tool (2)

A map is not the same as reality. Anytime we describe something, we are converting what may be a very dynamic and complex process into words and diagrams on paper. And, the description will matter. It will tell us where …

Money Fundamentals 3.17 What makes money money? (2)

So, what makes money, money? What characteristics must an object have before communities use it to buy and sell with each other? Community-wide agreement A community must agree to use the token as an intermediary when t…

Money Fundamentals 3.18 Key questions (2)

Here are the key questions to ask of any money system. It is helpful to clarify the answers before a group moves on to discuss the pros, cons, and specifics. Who Decides? What community will use this money? Who will de…

Money Fundamentals 3.19 Authentic and trustworthy (2)

Clear thinking We have discussed the importance of being clear when we talk about types of government, money systems or economic systems. However, because authenticity and trustworthiness require some form of power and a…

Money Fundamentals 3.20 Who creates new money? (2)

The Federal Reserve Act hands the privilege of creating our money supply over to the private banking sector. About 99 percent of the money we use today is created by private bankers or their central bank. Our government …

Money Fundamentals 3.21 How do people create money? (2)

There are three aspects to the how of money creation: the tangible, the intangible, and how money is entered into an economy. This is true whether or not the actual money token itself is tangible. Hands on Every type of…

Money Fundamentals 3.22 How is money destroyed? (2)

Just as money is created, it can be destroyed. How money is destroyed is generally a mirror image of how it is created, though it doesn’t have to be. If prices are rising in a fixed value money system or rising more tha…

Money Fundamentals 3.23 How much money? (2)

There is a certain proportionate quantity of money requisite to carry on the trade of a country freely and currently; more than which would be of no advantage in trade, and less, if much less, exceedingly detrimental to…

Money Fundamentals 3.24 Money and bankers (2)

Before we discuss the money systems prevailing over most of the past millennium, let’s make the distinction between a money system and a financial system. Nearly all money systems today are entangled with banking and fin…

Money Fundamentals 3.25 A basic, 100% bank: safe storage & transfer (2)

Basic banking is a business like any other; a basic bank has its own capital on hand to start up the banking business, and it charges its customers a fee to cover the cost of services. The bank sets its fees, and like an…

Money Fundamentals 3.26 A basic, 100% bank: intermediary (2)

Putting money to work In addition to storage and transfer services, a basic bank may offer an opportunity to its customers to put their excess funds to work. If customers know they will not need money for a period of tim…

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