Photo by Burst
What is it now, and what will it be in the future?
What constitutes money?
Economists generally define money as any financial instrument that is accepted as payment for goods and services. Additionally, it is approved for the repayment of a debt. This definition includes any instrument that has a valid record like a credit card or a bitcoin.
Cashless money will be explored later in this post.
Governments make money acceptable by allowing it to be used as payment for debts, like taxes due to the government.
The economist, Hyman Minsky said, “Anyone can create money; the problem lies in getting it accepted.”
Currency means banknotes, coins, and reserves issued by the government. These reserves usually come from a central bank or treasury department. Reserves are private bank deposits held by a central bank.
The money supply is considered to be the total amount of money available to an economy at any one time. It is made up of all the currency in circulation and the total of all demand deposits at banks. Demand deposits are readily available funds, like checking accounts, savings accounts, and other bank accounts, which usually consist only as electronic records.
Fiat money is like a check or a note in that a physical commodity does not back it. It gets its value when the issuing government declares that it is legal tender and can…