Wednesday, July 29, 2009

Why Money

Money should be a sign that I have given up something in exchange and yet received something back.

I have some goods, I do not need. Two people want them. One has some money and the other does not. Who would I give them to?

Unless I wanted to do an act of charity, I would not give them to the person with no money. I would not want to encourage people to expect something for no effort. Knowing it takes hard work to produce things, I would give up the goods in exchange for money. I would give my goods to the person with money, because I know that he is a producer. He has also had the made the commitment of giving up some goods or services for money in exchange for money, before he has received anything back. This is behaviour that should be encouraged, because it facilitates economic exchange. I hope that when I am in the same place, that someone will take my money in exchange for the goods and services that I want.

I would give my goods and services to people with money to exchange for them, because I want to encourage other people to be productive. I know that the alternative to using money is barter and barter severely limits my ability to trade. I will encourage people who are using money honestly, so that my potential form trade is improved.

I will know that trade with money only works if people are willing to exchange goods and services for money. I would prefer to reward the people who run the risk of accepting money, because I want to encourage this type of behaviour.

More on Money.

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