What is money?

Money is part of lives of everyone. Everybody wants to have more and more money but you'll not get it for free yet some people are rich and many are poor but nobody can live without it (at least if you're a part of society). So, what is money?, If it is just paper why it is so valued, why is everyone after it?, Why can't we print it more or as much as we want?, How can i have more?.  Now, to understand it we have to back in our history (don't worry I'll be quick on it).

History of Money

When humans started to civilize and grow into societies, creativity also developed and people rose above just survival. People were doing agriculture, making clothes, curing diseases, new discoveries, literature and much more but no one was doing everything but everyone wanted more than just food in their lives. This lead to creation of 'Barter System' in which people exchange goods and services they produce for other goods and services. But this was inconvenient, hence money was introduced, it had a standard value which everyone agrees to and accepts for any purchase. This became widely popular and still goes on.

Value of Currency

But what gives the currency we hold its value? Have you ever examined the notes you have in pocket carefully, they have a signature promising to pay the value or amount of money that note holds. There's a distinction here between money and currency, the currency is what circulates or travels but money is the value or price of a good or service. Different countries have different currencies but money is same , a product having value of $1 will be valued $1 everywhere in world.

Mahatma Gandhi on Indian Rupee
Image from Pexels

Money Creation

You can see that money has value when it is spent, it is useless if it is never spent. Hence, having more money and not spending it ever is more bad than having no money because you're depriving others from using it. Even savings are made to spend later. Money is the value of what you produce and give to society. When you produce more goods and services then you earn more. When you earn more and spend more and the economy grows. The governments calculate GDP (Gross Domestic Product) of their countries to print money accordingly, this is known as 'Fiat System or Fiat money' which has been adopted by many nations. 

Yes, a government can print more money but it is done only to manage the economy. Printing money blindly will fail the whole system, remember the value of money is in its spending. What's its use if you have nothing to spend on. 

Free Money

If you're a part of society, you have to contribute to it and the money system implements this very well. You cannot just eat sitting and doing nothing, you have to earn it. No one will be willing to give you more than you are producing and also what you're producing should give value to others, only then they will be willing to give you back that value in form of money. 

From what I told so far, you could understand that if people start to have more money than they produce, the money will lose its value and if people have less money or they have and don't spend it, economy will shrink and production will lose its value. This is basic concept of supply and demand.  

Price vs. Value

The price tag on a item determines its money value but not its true value. Less price doesn't always means the thing is less valuable and vice versa. Price just depends on the demand and supply of overall production but value of it is what we get from it. For example if we get water for free doesn't mean our lives not depend on it, its just that putting price on it doesn't worth it.  

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If you want to learn more read about economy and its growth. 

Peace.