Future of Money

Futureof Money

Inresponse to the question posed on how money might change thiscentury.

Inthe past, the meaning and value of money has slowly changed from oneform to another till finally the form that we use today. There was atime, we were using commodity money whereby the value of money wasattached to the material used to make it. This means that gold coinswould be more expensive than silver coins. This type of exchange wasa bit tricky as it was subject to fluctuations in the value of money(Price, 2000).

Overtime, this kind of money changed to receipt money where somegoldsmith discovered that they could store money for people and givethem a receipt as proof of it. This receipt could be traded at alater time for the gold. The idea of banking started here. Thesereceipts could then be used as currency later on.

Fiatmoney is whereby the money being used has been backed up by agovernment reserve. It only has value if it has been backed up and isbased on the belief that the government actually has backed it up.The currency can also be used to pay the nation’s debts. In thecoming years in this century, I believe we will move more towardsfractional money (Price, 2000).

Thiskind of money is whereby the bank loans you cash despite the factthat they do not have it at hand yet. Such policies, I believe willbecome more widespread whereby if an institution believes that theycan pay some amount within a particular time period, then they wouldstill continue to loan out or use money that’s not yet in theirphysical accounts.

FEDcould double the amount of money in circulation by buying bonds frombond holders. This is as close as the government can get to mintingcash for the public. By so doing they would be injecting money intothe economy. Decreasing interest rates would also allow more peopleto be able to take loans. Eventually, the amount of money incirculation will have increased exponentially, since loans are aninjection into the economy as well.

References

Price,D. L. (2000). Money therapy: Using the eight money types to createwealth and prosperity. Novato, Calif: New World Library.