Money on the Forex
As we all already know money is quite a fantastic and great invention, such as the wheel. Different purposes, but both are made to make things better in life. Like wheels help the transport, that’s how money are great tool when it comes to exchange stocks, buy and sales. If we don’t have them on our side, we will probably exchange service for service and stocks for stock - nothing progressive in near future. For example: if you are basket-maker and you need shoes, then you have to find a shoe-maker, who needs a basket. This shows that without having money the market for specialization and division of labor was impossible to achieve.
There a lot of definition of money, and we know that most of them are difficult to be given, because of the reflected in scientific statements, for which three samples should suffice:
- “Money is a creation of the money order” (F.G.Knapp)
- “Money is what is valid« (G.Schmoelders)”
- “Money is a general good of nominal validity” (F.Ltje)
In the view of such precise remarks the statement of a national banker (O.Issing) is almost reassuring: Huge heaps of scientific literature show evidence that the definition of money is anything but indisputable. But, if national bankers do not know where money ends it is more than doubtful that they have a concise notion of what money is.
Money is the intermediary, that frees the render of a service from being bound to one partner and at the same time makes civilization and culture possible thanks to the exchange of services and stocks. The money helps people to sell specific services and after getting them they buy some other one from somebody else. Returning back time , where money weren’t invited - people exchange salt for skin, gold for live stock - horses, cows…and so on.
Just to be well facilitating to be carried, countable and durable as well as stored and to compare prices, money plays a main part of the development of a market economy without which the civilization of today would be unthinkable. As we already mentioned it, money is the tool that exchange would not be possible - buying and selling things. Now-a-days we use money, plastic cards (credit or/and debit), coins to pay our bills, a big step form bartering stocks to exchanging money. It doesn’t have only cash value, it’s also artistic designed, which tell us more about its home country. What is most important and prominent about a country often finds its way on to the faces of its paper money? It can tell us about the unique plants and animals, prominent people from its history, or national symbols such as a coat of arms. Here are some well selected examples:
In China money shows images of dragons, rice fields, and beautiful mountain ranges.
In Nigeria where agriculture is a major part of the economy, images of people collecting coconuts and farmers selling their harvest can be found on the paper money.
Some of Brazil’s paper money depicts monkeys and sea turtles.
Now people usually use plastic cards for money and exchange paper bills, but one thing we should know - it wasn’t that way all the time. Just in the beginning people mostly have traded items of value like cattle or grain, lately the “new” forms of currency were inherently valuable things: gold, silver, diamonds and other similar precious things. In Ancient Rome, the salt was the main payment item for the soldiers, which was taken from the sea. Another good example comes form West Africa, where people traded manillas as currency from the late 15th to the early 20th century. They were ornamental bracelets made from precious metals such as copper, brass, or iron. The shell bead also called wampum was the earliest form of currency in North America. The Narragansett people are believed to be the first producers of these beads, which were created by shaping and drilling the inner spiral of Whelk shells. This was so valued thanks to the time and hard work to find suitable shells and make them into beautiful beads, involved in it.
Have you ever known that you and everyone else can have a little piece of a big company? How?! Well, people buy and sell shares of a company, in a stock market, which are also known as stocks. People who own shares of a company are called “shareholders”, and the share is a unit of ownership of a company. They buy the, because they want to make a good and smart investments. Companies sell stock because they want to raise money to expand their business—it costs lots of money to create new products, build more factories or stores, and hire more employees.
There have companies, which give part of their profits (called “dividends”) to their shareholders by paying them cash. Investing in companies that are successful can make money in the stock market. The process is easy - they make the investment profitable when they buy low and sell those stocks high. And the opposite: if the stock goes down in value, the shareholders lose money. But always remember that investing in the stock market could be risky as well as attractive. The investors can buy stocks in many different kinds of companies worldwide.
Here are some examples of stock exchange markets around the world:
- the New York Stock Exchange in the United States
- the London Stock Exchange in England
- the Nagoya Stock Exchange in Japan
- Sofix in Bulgaria
Where Does Money Get Its Value from?
At the times when gold or silver were used as money, the value of money was mainly determined by the value of the metal. This value in turn consisted of the desirability, the rarity and the difficulty to find the metal. Money made of gold or silver was like a good which was exchanged for another good. Today only cents might have some such value. The nominal worth of bigger coins and especially bills exceeds the cost of material and production by a wide margin.
Money which is itself actually worthless, is backed today by the products of the economy one can buy with it. It is a document of a claim to a service just as a received banknote is normally the proof of a previous service. If the national bank would double the amount of money tomorrow in the case of unchanged economic output, nobody would become any richer.
The result of such a doubling of money would be a doubling of all prices and nobody could buy more than before. But on the other hand all the money accounts and the debts would be cut to half of the value. This means that the creditors would lose half of the purchasing power of their assets and the debtors could now pay their debts with half of the former real value. Money Supply - the amount of money in the economy, consisting primarily of currency in circulation plus deposits in banks: M-1 U.S. money supply consisting of currency held by the public, traveler’s checks, checking account funds, NOW and super- NOW accounts, automatic transfer service accounts, and balances in credit unions.
M-2 U.S. money supply consisting M-1 plus savings and small time deposits (less than $100,000) at depository institutions, overnight repurchase agreements at commercial banks, and money market mutual fund accounts. M-3 U.S. money supply consisting of M-2 plus large time deposits ($100,000 or more) at depository institutions, repurchase agreements with maturities longer than one day at commercial banks, and institutional money market accounts.
On January 1, 1999, the European Union made money history, implementing the largest monetary changeover the world has ever seen. On that day, eleven of the countries in the European Economic and Monetary Union (EMU) adopted a new, single currency called the Euro. The Euro was a “cashless” currency when it was first introduced, meaning that it was only used for cashless transactions, such as electronic banking and stock market transactions. Actual Euro banknotes (bills) and coins officially went into circulation on January 1, 2002.
The original eleven countries that adopted the Euro were Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. By unifying, these countries became a stronger economic and political power in the world. A single currency also allowed people, services, and goods to move freely from country to country without the inconvenience of currency exchange.