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are found. Next, they have a high value-to-weight ratio, making them easily portable. Furthermore, they are highly divisible without losing value. In addition, every unit is identical to the other units, making it easy to recognise the value of them. Finally, they are easily recognisable. Gold and silver outcompeted all the other local media of exchange and became the world money because they embodied these qualities to the highest degree. Any money that developed as a useful commodity is referred to as commodity money, under th what is called a commodity standard. The gold standard of the 19 century is an example of this. Since money came into existence as useful commodity, and most commodities circulate by weight or by volume, commodity money too circulates by weight. That is why from 1834 to 1931 the British Pound (weighing 1/4 ounce) and the American dollar (weighing 1/20 ounce) were just different weights of the same thing, namely gold. And as the pound weighed 4.86 times the weight of the dollar, its value was also 4.86 times that of the dollar. In conclusion, money was not invented. It was not created by the state. There wasnt some good king once who, seeing his people suffering from a lack of coincidence of wants, got all his wise men together to solve that problem, upon which they said, yes, we have to use salt. Nor was there a town meeting where all citizens drew up a contract that theyd all accept dried tobacco leaves for money. Governments had nothing to do with it, they stepped in much later. Instead, there was a market process which embodied the actions of millions of people over time, all seeking their own benefit, all seeking to solve the problems of indivisibility and coincidence of wants, and in doing so motivating others to follow their example. And as a consequence, over time, money arose on the market, and gold and silver became the preferred money. All in all, it is clear that money exists out of necessity and is therefore here to stay. List of Works Cited Bazlinton, Charles (charlesbazlinton) (ed.). R A Werner: 2 Who allocates money? YouTube-video, 2011. (youtube.com/watch?v=DzNQlR5dtPo ) goodreads.com (web site). (goodreads.com/quotes/tag?name=monetary-policy) Paul, Ron (CongressmanRonPaul) (ed.). "What is Money?" with Joseph T. Salerno -- Ron Paul Money Lecture Series, Pt 1/3. YouTube-video, 2011. (youtube.com/watch?v=vowbrq_g5NM
8 juni 2012
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