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blueberry_kid's avatar

Why is there such thing as money?

Asked by blueberry_kid (5906points) June 11th, 2010

I dont really have an explination for this question, but in some terms, its actually a great question, I mean really, what is the point of it? We could be like the Native American Tribes, we can trade things, well no, not really, because thats about the same as paying for it, but its better to do that in my opinion.

Anyway, I’ve always just been wondering, what seriously is the point of money, we dont really need it do we?

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19 Answers

blueberry_kid's avatar

I might have some typos in there.

jaytkay's avatar

Say I’m a sheep rancher. And I want to buy the ranch next door. And the sheep rancher next door is retiring.

He’s not gonna want my sheep.

Ame_Evil's avatar

In a way money is the same as trading items. The money itself is just a piece of paper that represents that. For example you can trade 30 hours of your life at $10/hour to buy a new computer monitor.

All economy/money is is a massive trading network.

blemonge's avatar

It is a way of trading goods, or allocating resources, that is dependent on a lowest common denominator rather than attempting to value a good against another good which may or may not be of similar use or substance, which would be inevitable in a system of bartering.
These days, its a way of controlling people for the benefit of the elite, and removing ourselves from the natural consequences of the goods we consume.
Its a horrible thing and a good example of the stupidity of modern humanity, especially the rather American way money has become to be desired for the sake of money (in profit) rather than as a means of exchange.
...but then would we be having this conversation without the sophistication of exchange it allows?

dpworkin's avatar

All cultures all across the world developed symbolic barter. It is easier to exchange the representative currency than to exchange the actual commodity.

Cruiser's avatar

It’s to efficiently pass germs so we develop herd immunity to viruses and bacteria to ensure the survival of the human race. True story!!

MissA's avatar

Why do we need money?

‘Cause everyone has lost their marbles.

YARNLADY's avatar

It’s just like the points on Fluther. It’s not worth anything by itself, but when people will accept it in exchange for something else, it gains value. Money is an efficient way of keeping tract of work units which can be exchanged for goods and services.

syz's avatar

It’s a matter of convenience. It’s certainly easier than Rai stones.

evandad's avatar

You’ll have to ask someone a bit older than me, and I’m very old.

ETpro's avatar

It’s just really inconvenient to pay for a hear bypass operation in chickens. You’d need to somehow herd about 37,000 chickens into a hospital that really would rather remain chicken free for hygienic reasons.

Nullo's avatar

Money is a means of exchanging labor or property for product. It is, in that respect, a common denominator.

tranquilsea's avatar

Paper money evolved when the people who would eventually became the first banks started to safe keep other people’s gold in their vaults. They handed our paper certificates for the value of the gold and eventually people started trading those pieces of paper instead of gold.

A great short history of money is this one: Money As Debt. It is very eye opening and informative.

roundsquare's avatar

Money can be great. As the world advances, people specialize. Without money, this can’t happen. Lets say I’m a motorcycle repair person. The butcher in town doesn’t own a motorcycle. Now I can’t get meat.

Sure, I can fix the motorcycle of the barber who could give the butcher a haircut and give some of the meat to me… But if I need to keep doing this, things get complicated.

Money also lets us do things like save for the future and prepare for disasters. If I get injured, I can no longer repair motorcycles. Now what? Well, without money, maybe I could have saved up some promises and promise to fix motorcycles after I get better… but really, thats just money in promise form.

Basically, money acts as our “baseline” product. It is, itself, meaningless. But it gives a common way to measure value across different products and allows us to have a common medium of exchange. Thats why I love the concept of money.

Edit: I, myself, don’t repair or ride motorcycles. Just an example.

envidula61's avatar

Everything has a value, but that value fluctuates depending on which people are trying to get rid of it or acquire it. We trust, however, that by exchanging things, we can establish a relatively stable value for things. We further trust that once we’ve built this relationship of trust and created a stable system describing the relative value of things, that things will remain stable—no one will pretend something is worth more than it is.

We need a measuring stick for the relative value of things, and we use money for that measureing stick, but we could use anything. The numbers don’t have to be on paper. They only have to be digital, as long as everyone trusts that the measurements are fair.

Value changes through markets, where people buy and sell. This helps establish the relative value of things. Money, or any scale at all, let’s us display the relative value in a helpful way. Most people like money because they can see it, but in the future people will trust numbers in cyberspace just as much as physical money. In fact, I’d be surprised if money was used for even half of all transactions these days. Most of this exchange stuff already exists in cyberspace only.

When people cheat, then it can cause everyone to lose trust that money expresses relative values properly. We’ve had a lot of cheating lately. We’ve got the mortgage loan cheaters, and the derivatives cheaters, and Enron and a whole slew of others. As a result, people no longer trust that money is measuring the relative value accurately.

WHen people stop trusting, the economy declines. People stop buying stuff and selling stuff because they don’t believe its relative value is measured properly. No buying, and companies lay people off. We have a negative spiral, as people are laid off and therefore there is even less buying.

The government steps in and pumps money into the system. Remember—all money is made up. It’s just an idea. So the government can pump more money into the system, and then people can buy more stuff, stopping the negative spiral and, we hope, starting a positive spiral.

Of course, there are a lot of wusses out there who think inflation is the big problem and that pumping more money into the system will cause huge inflation. Never mind that there is huge excess capacity waiting to be put to work. We won’t have inflation until the economy heats up something fierce and that doesn’t look like it’s happening any time soon.

Right now, we’re in a holding pattern. Everyone is cautious, waiting to jump—either on the boat or off—depending on whether it looks like the boat will go some place lucrative or whether the boat looks like it’s about to sink. Of course, there are a lot of people in both camps, so the economy can’t move right now.

What we need is an infusion of trust. But no one really knows how to do that. You need major consensus for trust to develop, and people are too divided. In fact, they are whispering vituberative things about the other parties, and putting obstacles in the way of any positive motion one way or the other.

So we dither and dather, hoping for movement somewhere, and mostly seeing ourselves walk around each other endlessly waiting for someone to take leadership in a way we can all be confident of. I don’t think we live in a time where such leadership is possible. So I think we’ll just be futzing around in one place until gradually, everyone in lockstep (since we’re all cowards), we start moving.

More than you asked. Probably way above your head, too. But it’s a good question, and I’m not going to talk down to anyone. Hope you learned something from this.

mollypop51797's avatar

What should we have if we didn’t have money?

blueberry_kid's avatar

@envidula61, the longest answer EVER, but thank you

mollypop51797's avatar

@Nullo, that article is amazing! Thank you for sharing it! Who know what will happen to us, technology-wise, by 2011

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