It seems we're not all using the same definitions of some common terminology. Two of such are the words: Money and Currency. As this is the Business & Economics subforum, it'd be nice to have these terms discussed so to come to a definitive conclusion as to what the mean. It'd also be nice to NOT to see a WIKI link or Dictionary.com definition with a smart arse remark about Google. Just in plain simple terms what these mean, how they are different and some examples of both. If not, it's sort of futile to have back-and-forth debates as people are using terms differently. Questions to be discussed should include how Gold is different from USD. What a USD is. Is it a banknote (Federal Reserve Note). A promissory note? Both? When you have a coin (I have one) that's minted in a precious metal and has a $1 stamped onto it, but, the metal is worth more than a $1 - how do you describe the difference in the value that's stamped on the coin versus the value of the metal? We'll say the metal is valued at $500 in the same currency that is stamped on the coin. How is this coin different from a coin that has a $1 stamped onto it, but the metal is worth $0.10 in the same currency. These are the sorts of questions I'd like to have resolved.
I'll take a go at answering that. It is face value that is marked on the coin not precious metal value. The face value is determined by whoever mints the coin and the precious metal price is the worlds price that the world is paying at any given moment.
According to the US government, currency is paper money and coin. Money divides into categories: M1, M2, etc depending on how many different ways economists account for liquid assets including deposits, credit, etc.
Let's think about the $1 gold coin (suppose the gold is worth $500 if sold as a commodity). Which is the money. Which is the currency? Is the $1 stamp on the coin the money or the currency? Is the gold the coin is made of the money or the currency?
Here's some Please Register or Log in to view the hidden image! Please Register or Log in to view the hidden image! Please Register or Log in to view the hidden image! I'm only using the coin as an example.
We could have just as easily used Platinum as an example: Please Register or Log in to view the hidden image! The question is what is the difference in money and currency? The coin is stamped with a value. It also has an intrinsic value due to the metal it's made from. Is the metal the money? Is the stamped value the money? Are both a currency? Or is one money and another currency? Notice the varying values on these one ounce coins. Yet, the coins value is the same for all of them if you were to melt them down. Where does that value come from? Is it different than the stamp? Suppose we had a $1 gold coin that if melted down was worth $500 in gold. And we had a normal $1 coin that if melted down was worth $0.10. What happened to the $1? Did it turn into $500 and $0.10? That seems odd doesn't it? It's as if one coin has an intrinsic value and the other doesn't. The other seems like it's only currency and not really money. Like burning a bank note. The note has information written on it that should, in theory, be redeemable for "money". I mean, that's what bank notes are. Promises to pay a sum of money. Isn't it odd to exchange a promise to pay some money for ... a promise to pay some money? What if you actually wanted the "money". How do you go about getting it? Old Economy texts have this little rhyme about money: "Money is a matter of functions four, a medium, a measure, a standard, a store." It seems the coin made of gold acted as a better store of value and therefor acted in a classical sense, like money. But, what was the money? The stamp or the gold? It seems it was the gold as the non gold stamped coin was melted and then became worth less. It lost it's "store" function of money.
Sounds interesting (and won some awards) I think I'll check it out Please Register or Log in to view the hidden image!
"Money" and "Currency" are synonyms. Those two words mean the same thing. Yeah, right, let's define all the normal, relaible authorities on what words mean as "out of bounds" before we commence discussing the meanings of words. That's not going to land us straight into crank territory... There's no difference. They both just mean "any commonly accepted medium of exchange." There is nothing to discuss here. Anyone who is using "money" to mean something different from "currency" is unequivocably wrong and needs to stop doing that. Gold is a metal found in the ground, USD is a paper currency issued by the US Treasury. It's the official currency of the United States of America, issued by the US Treasury, with the money supply managed by the Federal Reserve System. Much of the US currency supply consists of banknotes, yes. Nope. You seem to be thinking of T-Bills or something like that, not dollars. Nope. The former is worth $500 if you melt it down and sell it as scrap metal, and the latter is worth $0.10 if you melt it down and sell it as scrap metal. Both are worth exactly $1 if you use them as a medium of exchange. What is so confusing about that? Done and done.
Not quite. The term for that is "physical currency." "Currency" without the "physical" qualifier means the same thing as "money" (although people are given to using an "implied" qualifier in certain contexts where it's clear what they mean). Again, not quite. That's "money supply" not just "money."
Currency and money are the same thing. The $1 gold coin is exactly $1 of currency/money. Just like it says right on the coin. The $1 stamp on the coin is the $1 stamp on the coin. The coin itself is money/currency. The gold the coin is made out of is the gold the coin is made out of. The coin itself is money/currency. What is so confusing about all of this? I'm not seeing the difficulty.
There is no difference. And that is the value of the currency in question. No, the metal it's made from has a market value, as metal. This does not need to match the exchange value of the unit of currency in question, nor even relate to it in any way (although, if the market value of the materials greatly exceeds the exchange value of a currency, people do tend to start scrapping the currency to sell its component materials, it gets very expensive to produce the currency, etc.) No, the metal is the metal. The coin is the currency. No, the stamped value is the stamped value. It tells you how much the currency in question is worth in exchange terms. There is no distinction between currency and money. It's a social construct. Everyone agrees that they will accept the coins as payment for goods and services, at the value stamped on the coin. Thus, it is imbued with exactly that value as an instrument of exchange. The stamp indicates what the value is. It is not, itself, the value. The value is a social construct. It was destroyed. Just as currency can be physically created, it can be physically destroyed. You could account it that way, sure. Why? You built that assumption into the premise. Each coin has a certain value as a scrap metal. That value is not "intrinsic." It's another social construct - a measure of how much others would be willing to exchange in order to obtain that scrap metal. There is no distinction between "currency" and "money." Right - by destroying the currency, you destroy the exchange value of the currency. Which is a pretty stupid thing to do, if the destructive process doesn't leave you with something even more valuable. Where? I'm looking at a US dollar bill right now, and all it says is "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE". It doesn't say anything about "money." Not if the banknote you're referring to is the US dollar (or the Euro, etc.). The gold standard no longer exists. You aren't making any sense, if that's supposed to refer to the US dollar. But there is nothing illogical about the scenario you describe. If an IOU has value, then it makes perfect sense that you could trade it for some other IOU, since that one also has value. ? You already have it. Money is supposed to act as a medium of exchange as well as a store of value. Both of those functions are important. If you just want a store of value, you should be looking to trade your money for some kind of appreciating asset. They'll typically outperform money, because they don't have the extra requirements to function as a medium of exchange (and so, an instrument of monetary policy, etc.). The money is the finished coin, including both the stamp, the gold, and the social context that imbues that with value. Gold is simply gold. You lost your stored value because you destroyed the currency. What is so mysterious about that?
Say you wanted a piece of cake and it cost 4.00, how do you exchange a 500.00 gold coin for that cake and what type of change would you receive? Do they just remove 4.00 worth of the coin by a cutting process?:shrug:
I suspect you have certain definitions in mind, that for some reason you didn't share? To me this is a question of semantics not economics. The reason there is some uncertainty is that people use the words both to mean exactly the same thing, and sometimes to mean slightly different things, and both sets of usages are correct, from a linguistic perspective, so long as the meaning is clear enough in context. In general I think of "money" as a slightly more conceptual idea, whereas a "currency" is a specific form (or relates to one or more specific forms) that may be given to money by some figure either through the application of power or by connecting the particular currency to some other widely-accepted measure of value. (And there is no such thing as "a money.") That said,if you find a wheelbarrow full of $100 bills, it's just as correct to say that you could a wheelbarrow full of [/i]money[/i] as it is to say that you found a wheelbarrow full of [/i]currency[/i]. In fact "currency would be a slightly disfavored use in common parlance in that context
This is like a lot of issues concerning definitions. In one context you will tend to generalize to, say, the popular notion, but in another context you will tend to get more technical. It's normally hard to distinguish money supply from money. If you have jillions in the bank, and a nothing in your pockets, it's hard to honestly say "no" to the question "Do you have any money?".
It's currency when it comes out of a mint, no matter whether the material it's made from can be separately sold as a commodity or not. Metal is not generally money unless it's treated as funds on deposit. I think money can be further defined as any asset which is convertible to currency upon demand. If you can get a dollar for an ant-sized grain of gold, because that's the agreement with the institution that holds it for you, then it would count as money, just as funds on deposit. Other kinds of money are the ones that have a settling period, or a future value, but can't be converted to currency upon demand.
Well, I have to do some more reading, however - I posit that money is unreal/imaginary (exists in our minds). I think we all agree to that? It represents the value of our labor. Currency OTOH represents money. Money can not be printed. Currency could be printed. Do we agree that this distinction if useful?
You seem to be implying that some things have an objective value that exists outside of the value that we humans have agreed upon.
