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Money

Craig Everett edited this page 2026-02-06 20:10:28 +09:00

Table of Contents

• On the Nature of Money

On the Nature of Money

Money has three primary uses that we care about:

1. Medium of exchange
2. Store of value
3. Means of settlement (how a debt can be valued and later paid)

Money is an emergent property of market systems. Money emerges in market systems any time unlike things must be exchanged. "Money" is a broad category whereas a "currency" is a specific instance of it. A currency must be liquid, easily divisible, fungible, and easy for non-experts to use. The value of a given currency is derived from a belief shared among market participants in the future value of the currency itself.

Belief in a currency is subjective, but in strong currencies that belief is based on objective facts about the currency, its properties, and its enforcement. Further, any objective threat to a currency's future value has an immediate impact on prices denominated in that currency, regardless of the current money supply.