The History of Money

Questions: 1. Do you think we should move away from using fiat money ( paper money with no commodity backing) to one backed by gold or silver? Why /Why not? What are the advantages and disadvantages?2. Would you be able to issue your own currency? Would it be legal? How would you go about it? What would be some of the key challenges? 3. Many Americans are concerned that the US dollar is headed for extinction (just as the Zimbabwe dollar did). Why are they concerned? Why has it not yet done so? Is it likely to do so in the future? Answers: 1. Moving away from the Fiat money No moving away from the fiat money is not an good idea because it holds certain type of advantages like it cannot be duplicated like gold money. In compare to gold /silver money, it is not a subject to society in the quantity (Alonso, 2001). Along with that gold money requires cost of production , labour and employees in order to mine the ore but the fiat money is cost efficient and requires no real productions. Apart from that, fiat money is easy to carry and has less affected if the theft has occurred (Artus, 2003). Fiat money presents the advantages to government in a ways that simply not possible under gold monetary regime. However, fiat money has limited access to nations but gold alone enjoys universal appeal and confidence to make it available for the larger and smaller settlements (Alonso, 2001). Besides that, gold does not require coercive law to enforce its use as money. The fiat money value has been decreasing every year and the price of the products is increasing but the price of the gold and silver is been increasing every year (Wiegand, 1984). 2. Challenges in Issuing own currency? Issuing own currency is not legal because it is printed by the federal banks or the apex bank of the nations who are given the permission from the government. Issuing own currency is one of the biggest challenges for the countries and nations (Gkogkozotou Asithianakis, 2013). One of the major challenges for the nations before issuing of the money are surplus liquidity in the domestic banking systems. The monetary policy of the nations is other major challenges in order to issue own currency is the growth in demand for notes for purchasing the goods and services. The notes cannot be issued without the permission of the Federal reserve System which operates national central bank which is compromise of governor, regional officers in order to issue the currency for the banks (Schnabel, 2011). Apart from that, demand notes must be able to represent the fist circulation paper currency by government of Australia. The currency must be able to satisfy the both the buyer and seller during the exchange of goods and considerations (Selgin, 1994). 3. US dollar are on the verge of Extinction Most of the Americas feels the whole economy of the bubble is one verge of collapse and biggest fraud of the paper currency is by the US $ is counting its last days because of the on verge the fiat currency has span of 28 years (Shi, 1997). The $ stretched that market about 43 years now. However, sign started showing 2000. By 2008 most of the people and the economies educating themselves the rise of fall of dollar has been started. In compare to the EU currency and the , it has been found that the dollar has fallen to a 15% year low (Weir, 2013). The threat of inflations via money printing is another major strategy by US which has backfire its currency value. Reference List Journals Alonso, I. (2001). Patterns of Exchange, Fiat Money, and Coordination. Advances In Macroeconomics, 1(2). doi:10.2202/1534-6013.1026 Artus, P. (2003). Local Currency or Foreign Currency Debt?. Revue conomique, 54(5), 1013. doi:10.3917/reco.545.1013 Gkogkozotou, V., Asithianakis, P. (2013). How University Hospital of Crete Succeeded in Decreasing Cytostatics Budget in 2012?. Value In Health, 16(7), A686. doi:10.1016/j.jval.2013.08.2036 Schnabel, J. (2011). Currency Mismatching. Manage. Decis. Econ., 32(7), 487-492. doi:10.1002/mde.1549 Selgin, G. (1994). On Ensuring the Acceptability of a New Fiat Money. Journal Of Money, Credit And Banking, 26(4), 808. doi:10.2307/2077948 Shi, S. (1997). A Divisible Search Model of Fiat Money. Econometrica, 65(1), 75. doi:10.2307/2171814 Weir, D. (2013). Fiat Money, Individual Rationality and Production. Metroeconomica, n/a-n/a. doi:10.1111/meca.12019 Wiegand, R. (1984). More value for your company's continuing education dollar. Business Horizons, 27(1), 32-35. doi:10.1016/0007-6813(84)90072-7