Slower Growth – fiat monies promote faster economic growth, and because of the nature of the ability to manipulate quicker, they can provide liquidity to stimulate faster economic growth. But for the immediate future, fiat currency is what we have to play with, and likely into our children’s future as well.
The currency itself must also be durable otherwise it would eventually lose its value as money as it decays or disintegrates, and, thus, people would not keep it.
She holds a Bachelor of Science in Finance degree from Bridgewater State University and has worked on print content for business owners, national brands, and major publications. We strongly believe that research and consultancy form the backbone of informed decisions and actions. Esploro Company is a research and consultancy firm catering to markets in Asia-Pacific, Europe, Middle East, Latin America, and North America. dollar was taken off the gold standard-the dollar was no longer redeemable in gold, and the price of gold was no longer fixed to any dollar amount. Commercial bank money helps create liquidity and funds in an economy.įor example, in 1971, the U.S. In Romania under Communist Party rule in the 1980s, for example, Kent cigarettes served as a medium of exchange the fact that they could be exchanged for other goods and services made them money. It also serves as a unit of account and as a store of value-as the “mack” did in Lompoc. However, the items that provide this function have varied over time. We want to include as part of the money supply those things that serve as media of exchange. Examples of commodities that have been used as media of exchange include gold, silver, copper, salt, peppercorns, tea, decorated belts, shells, alcohol, cigarettes, silk, candy, nails, cocoa beans, cowries and barley.Įconomists measure the money supply because it affects economic activity.
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