Friday, October 25, 2019

EVOLUTION OF MONEY


 EVOLUTION OF MONEY
MACRO ECONOMICS
DR SHASHI AGGARWAL
   MEANING OF MONEY
1.       THE TERM MONEY IN ENGLISH IS DERIVED FROM LATIN WORD “ MONETA” WHICH IS THE OTHER NAME OF ROMAN GODDESS JUNO
2.       FIRST REGULAR MINT WAS SET UP IN THE ROME IN THE TEMPLE OF THE GODDESS JUNO OR MONETA
3.       THE EARLY ROMAN COINS BORE ON ONE SIDE THE HEAD OF THE GODDESS WITH HER NAME MONETA
4.       GRADUALLY THE NAME MONEY PASSED ON TO THE PRODUCT OF THE MINT AFTER THE NAME OF THE GODDESS
5.       MONEY CAN NOT BE DESCRIBED ON   THE BASIS OF THE MATTER IT IS MADE AFTER THE NAME OF THE GODDESS
6.       MONEY CAN NOT BE DESCRIBED ON THE BASIS OF THE MATTER IT IS MADE OF

   MEANING OF MONEY
   MONEY IS DEFINED AS ANYTHING THAT IS COMMONLY USED AND GENERALLY ACCEPTED AS  MEDIUM OF EXCHANGE OR STANDARD OF VALUE
   MONEY IS DEFINED AS ANYTHING WHICH PERFORMS THE FUNCTIONS OF MONEY THAT IS MEDIUM OF EXCHANGE,MEASURE OF VALUE AND STORE OF VALUE
   MONEY CAN BE DEFINED IN TERMS OF ITS FUNCTIONS
   FUNCTIONS OF MONEY :
1.       MEDIUM OF EXCHANGE
2.       MEASURE OF VALUE
3.       STORE OF VALUE
4.       STANDARD OF DEFERRED PAYMENT
MONEY CAN BE ANYTHING WHICH IS GENERALLY ACCEPTED AS MEDIUM OF EXCHANGE,MEASURE OF VALUE,STORE OF VALUE AND STANDARD OF DEFFERED PAYMENTS
.
   EVOLUTION OF MONEY
   THEORY OF SPONTANEOUS GROWTH OF MONEY :-
1.       GIVEN BY PROF. SPALDING
2.       NOT DISCOVERED BY ANY PARTICULAR INDIVIDUAL
3.       ITS GROWTH WAS JUST SPONTANEOUS
4.       WITH THE GROWTH OF CIVILIZATION,EXCHANGE INCREASED
5.       PROBLEMS ASSOCIATED WITH BARTER SYSTEM, USING A  PARTICULAR COMMODITY AS MEDIUM OF EXCHANGE AND THIS COMMODITY CAME TO BE ACCEPTED AS MONEY WITH THE PASSAGE OF TIME
6.       MONEY CAME INTO BEING ON ITS OWN
7.       DID NOT REQUIRE ANY SPECIAL EFFORT

   THEORY OF EVOLUTION OF MONEY :
1.       PROPOUNDED BY PROF CROWTHER
2.       MONEY HAS COME INTO BEING AS  A  RESULT OF SPECIFIC HUMAN EFFORTS
3.       ACCORDING TO CROWTHER,” MONEY IS ONE OF THE MOST FUNDAMENTAL OF ALL MAN’S INVENTIONS. IT NEEDED THE CONSCIOUS REASONING POWER OF MAN TO MAKE THE STEP FROM SIMPLE BARTER TO MONEY ACCOUNTING.
4.       WITH A VIEW TO FINDING A STANDARD MEASURE OF THE VALUE AND A MEDIUM OF EXCHANGE THAT MAN HAS INVENTED MONEY THROUGH HIS CONSISTENT EFFORTS
   COMMODITY MONEY :-
1.       WITH THE BEGINNING OF HUMAN CIVILIZATION,VARIOUS COMMODITIES WERE USED AS MONEY
2.       HUNTING STAGE ,PEOPLE USED ANIMAL SKINS,BOWS AND ARROWS ETC FOR MONEY
3.       IN THE PASTORAL STAGE,THE GOATS,SHEEP,COW AND OXEN WERE USED AS MONEY
4.       IN THE AGRICULTURE STAGE,GRAINS WERE USED AS MONEY
5.       IN DIFFERENT STAGES DIFFERENT COMMODITIES SUCH AS SHELLS,CONCHES,CATTLES AND GRAINS
DISADVANTAGES :-
1.       ALL CATTLE OR OTHER GOODS ARE NOT HOMOGENEOUS
2.       LACK OF STANDARDIZATION CAUSED A LOT OF HARDSHIP OF VALUE
3.       SUPPLY OF COMMODITIES COULD ABRUPTLY CHANGE
4.       NOT POSSIBLE TO HOARD WEALTH IN THE FORM OF GOODS
5.       LACKED PORTABILITY
6.       THE TRANSFER OF  VALUE EXTREMELY DIFFICULT
   METALLIC MONEY :-
1.       MAN DISCOVERED VARIOUS METALS SUCH AS IRON,GOLD,BRASS ,COPPER AND SILVER ETC
2.       THESE METALS WERE USED AS MONEY
3.       INITIALLY PEOPLE WERE INDIFFERENT TO THE WEIGHT OF THE PIECE OF THESE METALS
4.       METAL PIECES WERE STAMPED A AND THEIR VALUE WAS INSCRIBED
5.       INTRODUCED DURING 8 TH CENTURY BY KING MIDAS OF LIDIYA
6.       HELD THAT EVEN PRIOR TO THAT METAL COINS WERE IN USE AND EGYPT
DEMERITS :
1.       SUPPLY OF THESE COINS COULD NOT ALWAYS BE  ADJUSTED TO THEIR DEMAND
2.       METAL COINS FAILED TO COPE WITH THE GROWING REQUIREMENTS OF TRADE
3.       USED TO BE HEAVY
4.       WERE EXPENSIVE FORM OF MONEY

   PAPER MONEY :
  1. IS THE INVENTION OF THE SONG DYNASTY IN CHINA IN THE 11 TH CENTURY
  2. METALLIC MONEY WAS INCONVENIENT AS WELL AS RISKY TO TRANSFER METALLIC MONEY
  3. INVOLVED GREATER RISK OF BEING STOLEN
  4. DURING THE TANG DYNASTY ( 618-907 CE) HOWEVER MERCHANTS BEGAN TO LEAVE THOSE HEAVY STRINGS OF COIN WITH TRUST WORTHY AGENT WHO WOULD RECORD HOW MUCH MONEY THE MERCHANT HAD ON DEPOSIT ON  PIECE OF PAPER
  5. THE PAPER A SORT OF PROMISSORY NOTE COULD THEN BE TRADED FOR GOODS AND SELLER COULD GO TO AGENT AND REDEEM THE NOTE FOR THE STRINGS OF COIN
  6. THESE PRIVATELY PRODUCED PROMISSORY NOTES WERE STILL NOT TRUE PAPER CURRENCY
  7. AT THE BEGINNING OF THE SONG DYNASTY ( 960-1279 CE) THE GOVERNMENT LICENSED SPECIFIC DEPOSIT SHOPS WHERE PEOPLE COULD LEAVE THEIR COINS AND RECEIVE NOTES
  8. IN THE 1100S ,SONG AUTHORITIES DECIDED TO TAKE DIRECT CONTROL OF THIS SYSTEM,ISSUING THE WORL’D FIRST PROPER,GOVERNMENT PRODUCED PAPER MONEY
  9. THIS MONEY WAS CALLED JIAOZI
  10. THE SONG ESTABLISHED FACTORIES TO PRINT PAPER MONEY WITH WOODBLOCKS USING SIX COLOURS OF INK
   EVOLUTION OF PAPER CURRENCY IN INDIA
1.       PAPER CURRENCY CAME INTO INDIA IN AROUND 18 TH CENTURY. ESTABLISHMENT OF EUROPEAN TRADING
2.       WITH THE PAPER CURRENCY ACT OF 1861,THE BRITISH COLONIAL GOVERNMENT GOT SERIOUS WITH THE BUSINESS OF BANK NOTES MAKING IN INDIA. BANKS LOST THEIR RIGHT TO ISSUE NOTES AND STATE IN CHARGE
3.       BANK OF ENGLAND PRINTED THE FIRST OFFICIAL PAPER BY THE GOVERNMENT IN INDIA
4.       CAME IN THE DENOMINATION OF RS 10,RS 20,50 ,100 AND 1000 WITH CURRENCY DETAILS IN TWO LANGUAGES AND PORTRAIT OF QUEEN
5.       FIRST INDIAN CURRENCY PRINTING PRESS WAS SET UP IN 1928 IN NASHIK
6.       1935 ,RBI CAME INTO EXISTENCE AND TOOK OVER THE RESPONSIBILITY OF MANAGING INDIA ‘S MONEY

7.       1N 1938,THE RBI ISSUED THE FIRST NOTE AND IT HAS PORTRAIT OF KING GEORGE VI
8.       IN 1944,THE RBI BEGAN PRINTING NOTES WITH A SECURITY THREAD AND NEW WATERMARK,FEARING AN INFLUX OF FAKE NOTES FROM JAPAN DURING WORLD WAR II
9.       AFTER REMODELING THE FIRST POST INDEPENDENCE NOTE CAME  WITH THE IMAGE OF LION CAPITAL OF ASHOKA
10.   BANK NOTE WITH PICTURE OF MAHATAME GANDHI WAS FIRST PRINTED IN 1996
11.   THE LATEST DESIGN CHANGE IN INDIAN BANK NOTES IS SAID TO BE THE INTRODUCTION OF THE NEW CURRENCY WHICH WERE PRINTED FOR THE FIRST TIME IN 2011
12.   EVOLUTION OF PAPER MONEY
13.   INITIALLY PAPER MONEY WAS CONVERTIBLE THAT IS COULD BE CONVERTED INTO GOLD OR GOLD COIN
14.   BUT NOW IT IS IN CONVERTIBLE
   MERITS OF THE PAPER MONEY:-
1.       NOT AN EXPENSIVE SYSTEM OF CURRENCY
2.       ITS SUPPLY CAN BE ADJUSTED ACCORDING TO THE NEED
3.       CONVENIENTLY TRANSFERRED FROM ONE PLACE TO OTHER
DEMERITS :
1.       EXCESSIVE SUPPLY OF PAPER MONEY
2.       WILL CAUSE INFLATION
   CREDIT MONEY : CREDIT MONEY IS ANY FUTURE MONETARY CLAIMS AGAINST ANY INDIVIDUAL THAT CAN BE USED TO BUY GOODS AND SERVICES.
MANY FORM OF :
1.       CHEQUES
2.       PROMISSORY NOTES
3.       DRAFTS
VIRTUALLY ANY FORM OF FINANCIAL INSTRUMENT THAT CAN NOT OR IS NOT MEANT TO BE REPAID IMMEDIATELY IS CREDIT MONEY

   NEAR MONEY :-NEAR MONEY IS A FINANCIAL TERM DESCRIBING NON CASH ASSETS THAT ARE HIGHLY LIQUID AND EASILY CONVERTED TO CASH. NEAR MONEY CAN ALSO BE  REFERRED TO AS QUASI MONEY OR CASH EQUIVALENTS
   NEAR MONEY ASSETS INCLUDE :-
1.       SAVING ACCOUNT
2.       CERTIFICATE OF DEPOSITS
3.       FOREIGN CURRENCY
4.       MARKETABLE SECURITIES
5.       TREASURY SECURITIES
6.       INSURANCE POLICIES
   LIPSY AND STENIER ,” NEAR MONEY MAY BE DEFINED AS FINANCIAL ASSETS THAT ADEQUATELY FULL FILL THE STORE OF VALUE FUNCTION AND ARE READILY CONVERTED INTO A MEDIUM OF EXCHANGE BUT ARE NOT THEMSELVES A MEDIUM OF EXCHANGE

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