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You need to know what Money is in order to use it wisely. So, what is Money?

There are several definitions of money, so I will try and put this in the easiest form to understand.

Money

1. a) A commodity or asset, such as gold, silver, platinum, copper, nickel, etc., stamped by government authority and used as an officially issued currency used as a medium of exchange and measure of value: coin or coins; also called hard money b) any paper notes issued by a government or an authorized bank and used in the same way; bank notes; bills: also called paper money, or paper note, that can be legally exchanged for something equivalent, such as goods or services.

2. As defined by common law: a medium of exchange that is authorized or adopted by a domestic or foreign government and includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

Real Money

I won't go into the history of money other than to say that coined money has been around since around 650 B.C.

According to the Monetary and Economic Review, money should have all ten of the following characteristics. If it does, it will function as it should.

1. Money should be a store of value. In terms of purchasing power, what it is worth today, it should be worth next year, or in ten years.

2. Money should be easily recognizable as money.

3. Money should be universally acceptable.

4. Money should be easily divisible.

5. Money should have intrinsic value. It should be desirable in, and of itself.

6. Money should be impossible to counterfeit.

7. Money should be durable.

8. Money should have high value in small quantities, making it more convenient to transport.

9. Money must be easy to handle, and be in a size and form easy to store, transport and exchange.

10. Money supply must remain scarce.

When we compare most of the paper currencies, including the U.S. Federal Reserve Note (dollar), to this list, we find they only have a few of the characteristics listed above. The U.S. Federal Reserve Note has only three. Real money must have all ten. However, we must remember that people - not governments, central banks, or even nation states - have always determined what money is, and what money is not. - Keep what I just mentioned in mind as you read more.

Now that you know what money is, what next? Click here and read on.

Please let me know your comments about this page. You can e-mail me at Roger7Hensley@hotmail.com

This web page last updated on: March 08, 2010