Three Types of Money

in LeoFinancelast year

there's a lot of controversy surrounding this topic but rod Lee speaking there are three main types of money one commodity money with people using various commodities as mediums of exchange for thousands of years anything from ruler cell birth to seashells or cattle in other words individuals agree to accept a certain commodity for their products or services instead of bartering however even this approach is suboptimal as it can be difficult to carry commodities around all the time therefore other type of money emerged to representative money with people competing let's say pieces of paper which represent claims to commodities rather than creating the actual commodities a good example was represented by the US dollar during the days of the gold standard because yes people transacted using pieces of paper but we're Lao exchanged them for physical precious metals whenever they wanted to as of a certain point only central banks were allowed to do this and eventually not even that was possible anymore marking the end of the gold standard that brings us to three fiat money or money that isn't then anyway back buy commodities but has been declared legal tender by the state so you need it and meet various obligations such as paying taxes it has value because we believe it has value or if you will it's an equation involving supply and demand with the state's blessing sprinkled in some economists choose to never use the term fiat money and instead use fiat currency because in their opinion fiat currency doesn't meet certain conditions to be considered money primarily because they do not consider it a proper store value