Full-value money, their difference from inferior

Money is the universal equivalent of services and goods by value. There are several types: cash and non-cash, inferior and full-value money. By the way, the most common interpretation of the name says about the Turkic origin of this word, where the coins were called tenge.

History of commodity relations

Before the full money appeared, people used barter, that is, direct exchange of goods. When the subsistence economy began to grow into production, the need arose for a certain commodity equivalent, which for a long time served a variety of things - furs, livestock, pearls, etc., depending on the region. Then money became silver and gold - first in ingots, then coins.

It was convenient enough that the rest of the goods were quickly replaced and as money they stopped paying. High-grade money from expensive metals was convenient to store because of the small volume and weight, they could not be spoiled by unforeseen force majeure, such as animal skins. And they were expensive, which is extremely convenient for the exchange.

The process went

Now the exchange of goods was divided into two equal parts: first you need to sell your own, get a full-fledged money, then get the right, already in any other place and after any time. The functions of money become an independent process. Manufacturers of goods can store them in anticipation of a better investment. Thus, monetary relations arose and began to develop, under which there was the possibility of accumulation for purchases, loans and debt repayment.

As a result of this process, money and goods began to have an independent movement, but this was not the end. Much more significant functions and even greater independence acquired banknotes, when they received the cancellation of their fixed content in gold, as full-value money.

Examples of this have all on hand. Paper and metal (not gold and not silver) money, stocks, bonds, etc., is something that does not have its own value. Thus, the banknotes were issued according to turnover and regardless of the provision of gold.

Kinds

Varieties of money is extremely large, with a mass of subspecies and the diverse forms that unite them. There are differences in the type of monetary material, in the method of circulation, in use, in accounting for the money supply, and in the possibilities of transferring money from one type of money to another. History identified four main types:

• Credit;
• Fiat;
• Secured;
• Commodity.

The last two species were preserved in functioning as full-value money. Examples in the title: it's real money , real, real, natural - commodity and secured.

This includes all the equivalents, that is, products that have independent utility and value (grain, livestock, etc.), as well as metal money - copper, bronze, silver, gold - that has its own fullness. Secured ones can be exchanged for a certain amount of the desired product or coins, that is, they are originally representatives of commodity money. The reasons for the transition from full-value to inferior money are due to the constant development of commodity-money relations.

Defective money

Non-real, decreed, paper, symbolic money is called inferior because they do not cost anything by themselves and are not proportioned to the face value. They have only certain functions: the state can accept them in any quality of payments on its territory, including taxes. These are banknotes and the money that is in the banks - non-cash, as well as money, as certain debts - securities. Herein lies the comparative characteristic of full-value and inferior money.

Full-fledged individuals have their own value, which forms the purchasing power, which is adequate to their intrinsic value (commodity and metal money), while their own inferior values do not. This is a hartal or money surrogate, but which can also be secured or not.

The form

Provision of currency metals or goods gives a representative value, that is, a measure of purchasing power, when inferior goods can be exchanged for full-value money. Unsecured at the same time can not be exchanged for gold or other currency metals, but they are money, if there is their universal recognition and confidence in them from the side of business executives.

Hartalnye types of money are state-supported inferior. In relation to them there is a legislative basis and recognition. For example, paper. For the first time they have been used in China since the thirteenth century. And the use of full-fledged money in Russia lasted until the reign of Catherine the Great, who introduced banknotes in 1769.

Paper money

Paper money is unstable, almost always associated with inflation, their release is affected not only by the need for turnover, but also by unproductive expenditures. The nature of full-fledged money is much more attractive, although with them the financial maneuver becomes much more complicated. Depreciation really reduces the purchasing power in relation to services, goods, and then both retail and wholesale prices are rising.

Regulation in circulation of paper money is quite difficult. The difference between the costs of their production and the nominal value gives the state revenue in the form of emissions. However, the depreciation of money forces to redistribute the national income, money ceases to enjoy confidence.

Cash and non-cash

Money held by the population, serving retail turnover, various payments and settlements, are cash. These are paper signs and metal coins, handed over from hand to hand in their natural form. Cashless same - the bulk of the funds on the accounts in banks. They are called credit or deposit money of non-cash settlement.

The incarnation is the outward expression of one or another type of money. That is, their form is differentiated according to the functions performed. It can be money electronic, non-cash, checks, deposits, banknotes, bills, loans, as well as money paper and metal coins.

There is practically no full-fledged money in circulation, advantages and disadvantages of them are not equal, since it is almost impossible for them to operate for all their stability. Nevertheless, they provide all the inferior money.

History of coins

To high-grade money first of all precious metals concern. Of these, coins were minted in the seventh century BC in Asia Minor. These were round standard ingots, where the pattern of coinage guaranteed the exact cost. Coins very soon became a means of sharing the universal in the Old World.

Gold and silver are valuable in themselves, therefore products from them could be used in any country where metal money went. Nevertheless, each state considered it its duty to have its own mint, thereby emphasizing its sovereignty. It was real money, because the face value of the coin was absolutely in line with the real price of the metal that was used to make it.

Credit money

This form of money appeared much later, when the commodity production was already built, and the purchase and sale had the opportunity to be carried out on credit - with payment by installments. The emergence of credit money is due to the fact that the basic function of money has changed: as a means of payment, they began to act as an obligation to pay off debts in a timely manner. Such a sale-and-sale relationship would be impossible without the proper development of commodity-money relations. What is more convenient to use today if there are full-value and inferior money? The comparison is clearly not in favor of the former.

The main feature of them is that they are issued clearly with the real needs of turnover. A loan is secured (some kinds of reserves, for example), then the loan is repaid with a constant reduction of balances. So the volumes of payment means that are provided to borrowers are linked, and the real need for money turnover.

Their value does not have credit money, being nothing more than a symbol expressing the value of an equivalent commodity. The way of development of credit relations was as long as the transition from full-value to inferior money: bills, accepted bills, banknotes, checks, credit cards and, finally, electronic money.

Bill of Exchange

The first type of credit money was a promissory note, which appeared along with the form of trade, where payment by installments was provided. It arose in the form of a written unconditional obligation, by which the debtor promised to pay the entire amount on a specified date and in a certain place.

Sometimes a bill is simple and transferable. The first is issued by the debtor, and the second is issued by the creditor and sent to the debtor, so that he returns it with his signature. Later there appeared treasury bills issued by the state to cover the budget deficit, as well as friendly bills that one person writes to another for account at the bank, and, in addition, bronze bills are used, they do not have a commodity cover. If the bank agrees with the payment guarantee, an accepted bill is issued.

Typical features of the described type of securities are abstractness (the type of transaction is not specified), indisputability (payment of a debt is mandatory, even if compulsory measures are required after the protest of a bill), handling (fat or endorsement, that is, there may be a transfer of a bill instead of a payment instrument, ). It is also characteristic that only wholesale trade receives the bill, where the balance is paid in cash, and that a limited number of persons are involved in the circulation of the bill.

Banknote

The central bank of the state issues credit money - banknotes. Previously, they had secured a double - commercial and gold guarantee. The first spoke about providing commercial bills related to turnover, and the second guaranteed the exchange of banknotes for gold. These are so-called classical banknotes, highly stable and reliable.

From a bill notes differ in many ways. Firstly, due to urgency, since the bill is a promissory note with a certain period, and the banknote is not. Secondly, under the guarantee, since the bill is issued by a separate entrepreneur and is supported only by its individual guarantee, and the banknote is guaranteed by the Central Bank, that is, the state.

A classic banknote, which can be exchanged for precious metal, can be distinguished from paper money by four parameters.

1. Origin. Both banknotes and paper money emerged from the function of money, but the latter are a means of circulation, and the former are a means of payment.
2. Emission method. Paper money is printed by the Ministry of Finance, and banknotes are issued by the Central Bank.
3. Returnability. Paper money does not return to its manufacturer, unlike banknotes, which after the expiration of the promissory note they provide, the Central Bank gets back.
4. The exchange. A classic banknote is exchanged for silver or gold, but there is no paper money.

But it should be noted that in our days banknotes for gold are not exchanged, and the goods are not always provided. They are issued only a certain dignity and are state money.

Deposit

Deposits are called numbers records on the account of a bank customer. When a bill is presented for accounting, a record appears. The bank does not pay banknotes for the bill, instead, opens an account, where it makes a payment by writing off a certain amount.

Deposit money is convenient because it allows you to accumulate money through the interest that is obtained when transferring money to the bank for temporary use. The measure of value of deposits can serve, but to be means of circulation - no. The deposit, like a bill, has a double nature. It is both a money-capital and a means of payment.

Check

Checks can be issued by the owner of the account to the credit institution, so that it will pay the indicated amount to the bearer of the check. There are many types of this payment document. Nominal checks can not be transferred to another person, order checks can.

The bearer demands payment of the amount to the sole bearer, the settlement ones are used strictly with non-cash settlements, and the accepted ones contain the bank's consent to payment. The essence of a check is that it is a means of obtaining a certain amount of cash, circulation and payment by a cashless method.