Why is money worth anything?

Recommended Brokers


Forex Chart

Mohaimenul

Freshie
Joined
Jan 28, 2019
Messages
5
Reaction score
0
Points
3





Money is essentially good, so as such is ruled by the hypotheses of supply and demand. The value of any good is determined by its supply and demand and the supply and demand for other goods in the economy. A price for any good is the amount of money it takes to get that good. Inflation occurs when the price of goods increases—in other words when money becomes less valuable relative to those other goods. This can occur when:


The supply of money goes up.
Demand for other goods goes up.

The supply of other goods goes down.
Demand for money goes down.


The key cause of inflation increases in the supply of money. Inflation can occur for other reasons. If a natural disaster destroyed stores but left banks intact, we would expect to see an immediate rise in prices, as goods are now infrequent relative to money. These kinds of situations are rare. For the most part, inflation is caused when the money supply rises faster than the supply of other goods and services.

In contrast to directly used consumers' or producers' goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium to the previous demand for direct use (e.g., for ornaments, in the case of gold). Thus the government is powerless to create money for the economy; the process of the free market can only develop it. Price action guide is essential if you are thinking to invest your valuable money in forex.

Money has value because people believe that they will be able to exchange this money for goods and services in the future. This belief will persist so long as people do not fear future inflation or the failure of the issuing agency and its government.
 
Sponsored Post

Hakone

Junior Member
Joined
Sep 21, 2018
Messages
63
Reaction score
1
Points
11
Money has a value because CBs are keeping enough Gold to cover it. At least this is how it should be based on economic theory. In practice, many things can be drivers of currency value, most of all is investors perception of currency value, which is somehow more psychological aspect then real value
 

LuisEzell

Freshie
Joined
May 3, 2019
Messages
26
Reaction score
0
Points
3
Why We Believe Paper Money Has Value. ... It's simple: Money is a both a good and a method of exchange. As a good, it has a limited supply, and therefore there is a demand for it. There is a demand because people can use the money to purchase the goods and services they need and want.
 

Viaso

Junior Member
Joined
Apr 11, 2019
Messages
55
Reaction score
5
Points
11
Money is the most essential thing for all of us as we are dependent on it. We trade because we need money. We take risk because we look for a greater reward. Money matters everywhere. It is a source of happiness to earn money and spend money. Do you agree with me in this regard?
 

KristanXX

Freshie
Joined
Dec 23, 2018
Messages
44
Reaction score
0
Points
6
I think every that think which has dependency of others is worthy in this world. People depend on money as it is their essential requirement and it enhances the worth of money. The strnegth of the currency depends on its usage and exchange on a broader level. Thanks
 
Sponsored Post
Top
Log in Register