Money what it is and where it comes from

The Homebrew Forum

Help Support The Homebrew Forum:

This site may earn a commission from merchant affiliate links, including eBay, Amazon, and others.
There's a really simple answer to what is money, to go with the much more in depth and subjective answers.

Money is a conceptual trade token with no value beyond that attributed to it. NO money is real, as like time it's just an idea, that idea been a way for people to barter goods and services that they have a surplus of indirectly for goods and services that somebody else has a surplus of that they require. ie. Person A has more carrots than they need, but wants some turnips. Person B has more turnips than they need but doesn't want any carrots. Person A exchanges their surplus carrots for trade tokens (money), and then exchanges these trade tokens with person B for turnips. Person B now has trade tokens that they can exchange for a good or service that they do want, rather than ending up with a bunch of carrots that they don't want and now need to trade.

Sadly, merchant person is the one giving the trade tokens, and deciding how many to give for the carrots. Merchant person is greedy, so gives few trade tokens for many carrots, then trades carrots at a marked up price for more trade tokens than they paid for them to somebody who REALLY needs carrots. Person A barely scrapes by, Person B barely scrapes by, merchant gets "rich" as he has all the trade tokens. Person D doesn't have enough trade tokens to buy what they need.... you know the rest, banker lends tokens, demands more back than they lent, ends up owning property too when D can't repay, make more profit for not doing a heck of a lot, gets bailed out by government with trade tokens given to them by the people when takes a risk with the people's tokens who left them with him to keep safe and loses them, person D meanwhile loses everything and doesn't get bailed out by government, gets put in prison for stealing a loaf of bread as starving to death, whilst banker gives himself more money for been so clever in robbing everybody. People who gave the government tokens blame the person who stole the bread for their not having enough tokens....

Yeah, I'm a swivel eyed lefty socialist, does it show? lol Money, like time, is a means for the wealthy elite to control the populace. It wasn't supposed to be, but capitalism (where everybody has a chance to make money) vanished a while back and was stealthily replaced with feudalism once more, disguised as trickle down economics. All that changed is that barons were replaced with corporations and banks. Capitalism hasn't failed, it just got switched out without people noticing.
 
Money is a purely imagined device to aid in the exchange of resources, goods and services. It is only of value as long as most people agree that it should be so.

The notion of money is closely tied to the concept of debt, indeed writing was first invented to record trading debts.

Unfortunately people now seem to have forgotten that what is of actual value is the underlying and necessary resources for human existence that money facilitates the bartering of, not the "money" itself, which now mainly consists of electromagnetically stored records of debts, held on a computer server located somewhere like Finland.

Hence we forget that when we run out of the said resources necessary for human existence, money will not help its owner, as it ceases to be of value any more, as no one swap their resources for any future promise, since there is no future.
 
It's all very well being deep and philosophical ( and I'm not arguing with any of that ), but bottom line is if I have no money I've got no food and my gas and electricity goes out and I can't make that next grain order etc etc. Bummer!
 
All good replies and quite a few are correct, some not so.
All coins have a metal value of their contents...ie £1.00 coin has a scrap value of £1.00 in metal.
Notes (5/10/20/50) are basically a credit/cheque, issued by the Bank of England/Scotland to the value of that note. This means that the BoE/S must have reserves (normally in gold) to cover that ammount. ie "Promise to pay the bearer, on demand to sum of...).
Now if the BoE do not have that ammount of gold they cannot just print more notes...well they can and that is why the interest rates go up on any borrowing.
I hope this makes sense to someone as I just lost my train of thought. It was explained to me by someone many years ago using 100 X 1p coins
 
Don't worry, not planning debating religion. It's personal belief, not something there is a right and wrong for. 😉

Sent from my NEM-L51 using Tapatalk
 
All good replies and quite a few are correct, some not so.
All coins have a metal value of their contents...ie �£1.00 coin has a scrap value of �£1.00 in metal.
Notes (5/10/20/50) are basically a credit/cheque, issued by the Bank of England/Scotland to the value of that note. This means that the BoE/S must have reserves (normally in gold) to cover that ammount. ie "Promise to pay the bearer, on demand to sum of...).
Now if the BoE do not have that ammount of gold they cannot just print more notes...well they can and that is why the interest rates go up on any borrowing.
I hope this makes sense to someone as I just lost my train of thought. It was explained to me by someone many years ago using 100 X 1p coins

As for the coin scrap metal value this has not been the case for a long time though pre 1993 copper coins contain around 1.5 times there value in copper newer ones are copper plated steel. The best I could find on the metal value of a £1 coin is
"According to the Treasury a pound coin is made up of 70% copper, 24.5% zinc and 5.5% nickel.

Current raw metal prices stand at

Copper: $3.07/lb -> $6.77/kg
Zinc: $0.83/lb -> $1.83/kg
Nickel: $6.04/lb -> $13.32/kg

A single pound coin weighs 9.5 grams so...

The cost of raw materials required to make a pound coin is $0.056239525 or £0.037999679." so just under 4p.
 
Simon12...you have got way too much time on your hands. I was always told (might not be true) that because a coin does not state (promise to pay the bearer....) it is worth its weight in gold/precious metal.
So a £1.00 coin is not worth £1.00
 
Now you have confused the **** out of me.
If you buy a gold soveriegn (sp) at its value, in gold, its worth the price of the gold content. Though it is only worth �£1.05 in real money.
Im going for a lie down.
or is that guinea
 
As for the coin scrap metal value this has not been the case for a long time though pre 1993 copper coins contain around 1.5 times there value in copper newer ones are copper plated steel. The best I could find on the metal value of a ��£1 coin is
"According to the Treasury a pound coin is made up of 70% copper, 24.5% zinc and 5.5% nickel.

Current raw metal prices stand at

Copper: $3.07/lb -> $6.77/kg
Zinc: $0.83/lb -> $1.83/kg
Nickel: $6.04/lb -> $13.32/kg

A single pound coin weighs 9.5 grams so...

The cost of raw materials required to make a pound coin is $0.056239525 or ��£0.037999679." so just under 4p.

So if I buy 100 x �£1.00 coins they are worth £4.00
 
So if I buy 100 x ��£1.00 coins they are worth �£4.00

Yes, or at least the metal is worth that. But like you said all coins and paper currency are only issued to banks who have that amount deposited with the bank of England so at least in theory at least physical currency is real money backed by something. Note "pound sterling" originally comes from 1lb of sterling silver and what ever number of silver pennies at the time was a pound was 1lb of sterling silver. Now a ib of silver is around £200.
 
Yes, or at least the metal is worth that. But like you said all coins and paper currency are only issued to banks who have that amount deposited with the bank of England so at least in theory at least physical currency is real money backed by something. Note "pound sterling" originally comes from 1lb of sterling silver and what ever number of silver pennies at the time was a pound was 1lb of sterling silver. Now a ib of silver is around �£200.

That has made it so much clearer
 
As for the coin scrap metal value this has not been the case for a long time though pre 1993 copper coins contain around 1.5 times there value in copper newer ones are copper plated steel. The best I could find on the metal value of a �£1 coin is
"According to the Treasury a pound coin is made up of 70% copper, 24.5% zinc and 5.5% nickel.

Current raw metal prices stand at

Copper: $3.07/lb -> $6.77/kg
Zinc: $0.83/lb -> $1.83/kg
Nickel: $6.04/lb -> $13.32/kg

A single pound coin weighs 9.5 grams so...

The cost of raw materials required to make a pound coin is $0.056239525 or �£0.037999679." so just under 4p.
You need to get out more Simon:mrgreen:
 
I copy and pasted it from someone else not work it out from scratch hence the quotation marks.
 
Back
Top