Money is no less important today, and perhaps more so than ever. Since the twenty-first century is generally recognized as the century of scientific and technological progress, and the development of scientific and technological potential always entails a new round of economic development, world history is proof of this. And it was in the XX-XXI centuries that money, as part of the economy, underwent a number of changes aimed at improving the monetary system.
Origin of money
The origin of the money, in one way or another, is connected with the process of exchange development, in which various theoretical schools agree. To study the origin of money means to study the development of trade, exchange. We will not consider the very ancient time, when the skin of a mammoth was exchanged for a stone tip for an arrow. It is important to note that at first the exchange of something took place as a single transaction, to which a person was pushed by need. Then the exchange turned into a system. People had a surplus of something. Excess could be changed for the necessary things that a man did not have, and people began to intentionally produce these excesses, making it their craft. And the surplus produced was called a commodity. So, the simplest form of exchange is barter.
Barter is the direct exchange of one product for another. For example, a farmer wants to exchange his grain for boots, which the shoemaker has. But barter deals are only possible with a limited set of goods offered for exchange. The number of participants in barter is also limited. When expanding the circle of participants barter encounters a number of difficulties. Returning to the example of a peasant and a shoemaker: a shoemaker is not interested in grain and needs furniture. It will take an indefinite number of intermediate trades before the farmer finally becomes a happy owner of boots and a shoemaker of a new table.
As the exchange develops in different regions, the product with the greatest marketing power is distinguished. In modern terms, this is the product with the highest liquidity. Liquid goods (or any other good) are easily sold goods. On what depends the ability of goods to sell, or liquidity.
Liquidity of money
First of all, it is limited to individuals to whom it is possible to sell its goods. It is impossible to sell the goods to a person who has no interest, the need for it. It is not possible to sell the goods to persons who, for legal and physical reasons, are excluded from the purchase of the goods; they are unaware of the possibility of exchange and other restrictions.
Second, the ability of the goods to be marketed is limited to the area in which the goods can be marketed. That is, apart from the existence of a circle of persons to whom it is possible to sell the goods, there should not be insurmountable obstacles (physical or legal) when transporting the goods to a given area. Costs associated with the delivery of the goods (transportation costs) should not be too high.
Third, the liquidity of the goods is limited quantitatively. There are always quantitative limits to the amount of sales, which vary greatly from product to product.
Fourth, the ability to sell depends on the time period during which the exchange is possible. For example, it is possible to compare the possible time of sale of vegetables, seafood, political newspapers, fashionable goods and tools.
In the course of the development of the exchange, there was a need for such a universal product that would be acceptable to the greatest number of people, it could be easily transported, and it would have a sufficiently long service life. The product with the greatest marketing power becomes money. Money is absolutely liquid when the cost of exchanging money for other goods is zero. Thus, money appeared at a certain stage of development of economic life of the society, but not as a product of any legislative act of the state, but as a result of the development of economic relations, as a result of the natural economic life of people. As a means of exchange any goods were used - livestock, grain, salt, honey, etc., but all of them had to meet one requirement: to get general recognition of both buyers and sellers as a means of exchange.