Friday, 26 March 2010


Really had to make a point about money... It seems, nowadays that it's the biggest thing on peoples minds is money usually, or at least it's common. Now, a lot of people are completely unaware that in the country they reside in, they will probably be under a system called "fiat money" as the currency in operation. In latin it means "let it be done." Also, the introduction of cash as we know it basically originated from the American Civil War back in the 1800's when their president introduced $340 million greenback dollers to use as a tool to control the population into labour.
Here's the interesting part though... This is a copy & paste from Wikipedia so credit to them for the text.

While specie-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of specie, fiat money's value is unrelated to any physical quantity. Even a coin containing valuable metal may be considered fiat currency if its face value is higher than its market value as metal.

A feature of all fiat money is its (typically exclusive) acceptability to the government for payment of taxes and charges.

Monetary economics

In monetary economics, fiat money is an intrinsically useless good used as a means of payment.[8] In some micro-founded models of money, fiat money arises endogenously as it makes feasible trades that would not otherwise be possible, either because agents may not anonymously write IOUs, or because of physical constraints.

Legal tender is variously defined in different jurisdictions. Formally, it is anything which when offered in payment extinguishes the debt. Thus, personal cheques, credit cards, debit cards and similar non-cash methods of payment are not usually legal tender. The law does not relieve the debt until payment is accepted. Coins and notes are usually defined as legal tender.

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Now, basically, what this means in laymans terms... In economies that use fiat money which is basically the entire world nowadays. It does not bear any relation into the physical amount of it that you may happen to be in posession of, because if you are just crap, having lots of money won't change that. In fact, it's likely to make you crappier than someone who may have less.


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