What's money? A few misunderstandings

There are questions that may sound banal, but in fact aren’t. Or, if you want, many people have muddled ideas on the answers. Sometimes because they are about facts we take for granted, since we are immersed in them, and maybe happens something like when you repeat a word too much times, and in the end lose it’s meaning. And sometimes it may be dangerous, since if you forget how the mechanism works, you can get crushed into the gears.

So, here’s the banal question: what is money? What does money mean? The answer isn’t so easy. Maybe somebody would answer that money represent a certain amount of gold detained by the state that issue money, but this is a wrong answer, since gold is a form of money. Used from centuries, and maybe that’s why many consider it something “different”, but it’s still a form of money.

Well, here’s something you may not expect to read in a financial blog: money’s worth nothing. The value is in what you give or get in exchange of it: food, especially when you’re hungry, clothes, especially when you’ve cold, and so on.

Money is mainly a medium of exchange, to avoid inconveniences of a barter system. Historically, there have been several kind of money: shells, pearls, and also gold. But don’t forget gold is just a metal, and hasn’t any “real” special value for this: the value of gold can be considered “conventional”.

Original post (in Italian): Equivoci sui soldi: che cos’è la moneta?

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