Money in the economy is ... The role and function of money. Amount of money in circulation

Money in the economy is an indispensable component of the existence of modern society, the need for which pursues each of us throughout life. However, not everyone knows where they came from. The role of money in a market economy today is difficult to overestimate. It turns out that this concept came to us from ancient times.

How to buy goods without money: from history

In primitive social relations, the market as such has not yet been approved. The prevailing form of mutually beneficial acquisitions was a natural exchange. At that time, no single monetary unit was an intermediary for such a barter. Both acts (sales and purchase) were held almost simultaneously. Problems with the establishment of proportions in the oldest civilizations also did not arise: this or that commodity was evaluated according to the degree of need in it.

With the passage of time, the boundaries of exchange expanded. In many respects this was contributed to the division of society into classes, according to employment in a particular sphere of work. For the procedure standard for those times barter there were many difficulties caused by the variety of goods. This largely played its decisive role in giving special status to single goods for exchange. The emergence of an equivalent for specific commodity groups, determined by the consent of the people's congresses, was given a name in a particular territory. For example, in Rus, the monetary unit was called "kuna", since the expensive equivalent of furry martens was accepted for the exchange equivalent.

There were no money in the world: fur, gold, and those that we use today - paper. The times of gold and commodity denomination have sunk in the summer, today money in the economy - these are bills, checks, credit cards, etc.

Functions of money in economic development: the theoretical aspect

The functions and role of money in today's market economy can not be overestimated. Their essence is more accurately expressed in the processes of circulation and production of goods.
The main functions that perform money, consider the forms that they take in a particular system of financial relationships. Money matters as:

1. Measure of value.
2. Cumulative means.
3. Subject of treatment.
4. Payment instrument.

Money - the subject of treatment

For the common man, there is one, the most important function and purpose of money - their application to pay for purchased products or services. In this case, money is a special group of goods, which has universal purchasing opportunities. The exchange of money that has come to replace barter in the economy makes it possible to single out its advantages:

1. Act of sale from the act of purchase is significantly different. Figuratively speaking, the buyer first needs to sell his goods, get money for him, and then buy the necessary products. In the conditions of market barter, the process of exchange of goods made each of the participants in these relations simultaneously a buyer and a seller.
2. Opens much more options for the choice of goods, compared to its total lack of barter.
3. The general purchasing power of money makes it possible to use them in specific territories.

Although at the moment it is impossible to categorically state that barter is not relevant. The most striking example of the use of this method of purchasing goods can be called trade barter exchange between some CIS countries, for which it is more preferable than the circulation of a depreciated ruble and the payment of such an "unstable" currency.

In most cases, speaking of money, people imagine what they call banknotes. Colored papers and coins of different denominations, entered into the money turnover - the money supply of cash. In addition, the means of circulation are also understood as bank loans, deposits and demand deposits. Cash, that is, real money, and household deposits in banks, unlike government securities and savings and savings, are used as means of universal circulation.

Money is a measure of value

Separately, we should consider money as a measure of value. To measure and compare the different values of goods and services in the modern market, it is necessary to recognize a single monetary unit. In addition, the total value of the goods, expressed in monetary terms, directly depends on its quantity, distance, volume. The task of government bodies in Russia is also to establish a nationwide measure of value. Proceeding from this indicator as a single relative measure of value, it is much easier to calculate the price of other goods and establish equivalent relationships between them.

If there is no fixed cost measure in market conditions, it would be impossible to determine the price of any product. In this case it would be necessary to perform calculations based on the proportions of the exchange of one product to another. That is, to calculate the value of the goods would be incredibly difficult.

How does the price of money change during the inflation period?

Monetary units as a measure of value are absolutely ineffective in periods of rapid devaluation of the national currency exchange rate. Inflation, expressed in the reduction of the value of the common good, is reflected in the prices of goods that can not already be called static. They are in constant economic movement, as a result of which specialists distinguish two types of prices: nominal and real. The first is the amount of monetary units that can be required to pay for a particular good at the price that has developed to a specific moment in the market. The second, real price, implies payment of the same value, but already in the base period.

Of course, there is a clear interdependence between the price of goods and money. Prices for different groups of goods grow when the purchasing power is reduced, and when the price falls, everything is exactly the opposite.

Money is a way to save money.

Money in the economy is an indispensable means of accumulation. The funds withdrawn from circulation represent an accumulating financial mechanism, the turnover of which increases, depending on the duration of their exclusion from turnover. The role of money in a market economy in this sense is to give their owner the opportunity to use their purchasing power after a certain time. Absolute liquidity, which is endowed with money, makes it possible to apply them at any time, performing the functions of a payment facility.

In addition, the advantage of money as a cumulative element is their ability to retain their original nominal value. The price of money in the economy is largely due to accumulation. Although, it is not possible to extract substantial profits from owning money as such in most cases. With the preservation of jewelry, antiques or real estate, securities, you will not be able to achieve any income. But, with the inclusion of accumulation in circulation, the following financial transactions are available:

1. Purchase and sale of jewelry.
2. Acquisition of property and things with guaranteed constant demand.
3. Purchase of obligations given by debtors.
4. Acquisition of securities that successfully compete on the financial exchange.
5. Purchase of foreign currency.
6. Making a deposit in a bank in local currency (using non-cash funds).

How to accumulate in income?

Accumulated money in the economy is an extremely important component of it. It is impossible to achieve an increase in economic indicators without accumulation. However, if the only condition is not met (the level of purchasing power must remain unchanged for a sufficiently long period), real money will not bring their owner any income.

In addition, to serve as a means of accumulation during periods of rapid inflation, money also can not. Their depreciation eventually leads to bankruptcy. The optimal solution in this situation is to save only small amounts for some time, and it is important to invest considerable amounts before the onset of inflation. The best investment of money - the acquisition of real estate or other no less valuable assets, which, although they do not have such a confident liquidity, will not lose their value. Also, you can save your savings in the conditions of inflationary growth by exchanging the national currency for a more stable, foreign currency.

Cash as a payment instrument

Money in the economy is a payment instrument, which for the first time arose, as already mentioned, with the development of commodity exchange. Its concept includes the alienation of goods, separated from the time of sale, that is, sale on credit. Hence comes the payment function of money. When selling goods with a delay, money also fulfills this important economic function. However, they do not play any role as a means of circulation in credit purchases. Meanwhile, in determining the value and prices, money works as a perfect mechanism.

In practice, this happens in the following way: the buyer pays the appropriate amount upon the arrival of the control period for making a payment. It turns out that the money comes into circulation not immediately, only through a contractual period. This function clearly reflects the subsequent development of industrial and trade relations between market participants. As a payment instrument, money is valuable not only as a means of purchasing, but also as a universal embodiment of wealth, so it is not possible to limit this function to the scope of commodity turnover.

Loans and borrowings in today's economy

The development of the payment system in the modern world is expected to lead to the emergence of credit funds. The concept of "bill" introduced into the financial mechanism of the international economy has become important and indispensable in terms of lending that generates debt obligations. Goods purchased on an installment plan or a loan automatically become an object of debt repayment. In the process of repayment of a loan or installments, cash is a payment instrument.

Cash over time is increasingly replaced by promissory notes. A written document guaranteeing the repayment of debt funds is an absolutely legal form of guarantee for the borrower. After the deadline, the debtor must definitely pay the fixed amount. The development of commercial credit is a fundamental factor that has influenced the spread of bills in market relations. Most often this form of promissory note endow each other with commodity producers.

Features of the functioning of money in the Russian economy

Money in the modern economy of Russia over the past decades is a weighty instrument of payment, value, accumulation and circulation. At the same time, the imperfection of the trading system in the country, which also affects its foreign partnerships, hinders the development of industry, the growth of the living standards of the population, the rise of socio-cultural and demographic indicators. In the search for reasons for the constant economic difficulties in the state, several factors are clearly expressed.

The development of the country's economy is connected not only with money circulation. The mass of money in the Russian economy plays an important role. Meanwhile, over the years of independence and independence in our state, the money supply has increased by more than 770 times. Experiencing the shortage of the developing market economy, felt to consumers and producers, several times a decision was made to introduce additional funds into the national turnover. Naturally, the cash issue significantly lagged behind inflationary growth, which led to quite expected consequences.

Being in unequal conditions, the real flows of the national currency were rapidly drying up. Trying to slow down the development of this economic "pathology", entrepreneurs intensified private issuing activity. The majority of the RF economic entities created various payment mechanisms aimed at retaining assets in the existing sector. In particular, money in a market economy remains today for a long time due to the successful system of netting off payments, the circulation of bank bills, corporate bonds, etc.

The leakage of funds outside the state is one of many reasons for the failure of the Russian Federation in its attempts to build a full-fledged model of highly developed market-economic relations. A decisive place here belongs to savings and their investment. Regular investment of money by interested economic entities contributes to an increase in the circulation of income, but in reality everything happens differently. The leakage of cash from circulation negatively affects the consumption process as a whole.

At the same time, savings of households that have moved to a group of savings (cash "on hand" are not implied), represent an investment. An additional source of capitalization contributes to the stable provision of high GDP.

Conclusion

Summing up, taking into account all of the above, you can easily determine the role of money in the public economic sector. They are truly a historical criterion characteristic of commodity productivity. Money in the economy is a universal equivalent, a commodity with a special status. Thanks to them, the circulation of goods and services in the chain "seller-buyer" has become much easier, in comparison with the barter model of trade relations.

The essence and significance of money in the country's economy can be visually seen through the prism of the functions they perform.

First, they serve as a means of circulation, thanks to which the inconveniences of barter transactions can be completely avoided.

Secondly, money carries out the function of a measure of value, providing an opportunity to measure the value and value of goods.

Thirdly, the accumulation function is characteristic for money temporarily withdrawn from circulation, which allows you to observe the wealth. At the same time, the advantage of the current market economy model is the provision of the opportunity to profit from the very wealth.

Fourth, money is an important payment instrument. Normalization of circulation of cash and non-cash funds is a chance for the successful development of any economic sector, since only the diversified use of money in the state will help to strengthen the economy of the whole country.