The money as an economic tool by: Quirino Taiano Campoverde money is an economic instrument that can assume the following functions: a. Medium Exchange b. c. d. payment reference account unit value the money reserve is one of the main arguments studied in economics.
Some theories about the combination of these four functions have historically been developed, some of them affirm that greater precision is needed and that a single theory would be insufficient to deal with all the characteristics of money. Before the introduction of money, the only way to exchange goods was barter, in other words the direct exchange of goods. Barter was a simple modality but at the same time subject to different problems, including temporary links. Who wanted to exchange goods of different type, could have done so only when both goods were available at the same time and in the same space, situation that was impossible because of various seasonal ripening times and often unwise. With time, direct barter is passed to mediate barter, through the use of a third commodity which played the role of value bridge. This merchandise consenting the possibility of exchange beyond the contemporary products and make indirect exchanges.
This third merchandise was in the Western world individuated in well defined elaborations of some metals, among them the most notable was the gold. The first cases of money were objects that were useful for their intrinsic value, that is important as a commodity of Exchange and included any product of great diffusion with a proprio value, for example: livestock. As soon as a commodity is used as money, it acquires a value that often is different from their intrinsic value. The fact of being able to be used as money serves to increase its usefulness and its value that depends on social aspects and is influenced by the use that society gives you, your value is therefore not fixed. The fluctuation in the value of a commodity of Exchange depends on supply and demand. The system of exchange of goods has become a system of convertible money. In this system, the money if it has no intrinsic value, but it can be converted into valuable merchandise. Banknotes and coins of non precious metal are covered by Governments and banks. It suffices to recall that much of the 19th and 20th century many currencies were based on the convertible money thanks to the use of the Gold standard. Original author and source of the article.