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What is money? How does it work and what is its value?
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After having posted in another economics subreddit I realize that I do not understand what money is really about. I have some misconceptions about how it works.
So realizing that, I thought of asking this question. Additionally, I think understanding money and economics will help me understand things like the stock market better.
Top Comment: Money is kind of a confusing concept. here are the three usual characteristics of money youll find in a text book: A store of value The unit of account The medium of exchange I'd say 1 and 2 are the least important because there are many ways you can store value and people denominate prices in foreign currency all the time. 3 is what makes money important. Money is one half of every transaction. Disequilibrium in the market for money will cause disequilibrium in all other markets for that reason. If you dig deeper you'll find there are actually many kinds of assets that have this "moneyness" property. Cash, meaning green pieces of paper, is the most recognizable. But a very close substitute for cash are reserves. Reserves are just numbers on the balance sheet of the Federal Reserve. Reserves are traded electronically. Only banks are allowed to hold reserves. If banks want to they can convert their reserves to cash at a 1 to 1 exchange rate. Cash and reserves constitute what we call "base money" or the MB money supply. Broader money supply aggregates include other kinds of assets like demand deposits. There's a table with all of them here .
Can someone explain how ultrasound money can exist?
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How can something be more sound than sound money?
Please, explain without memes, and not from an investor or trading perspective but from a economic perspective.
Top Comment: I recommend watching Justin Drake’s episodes of Bankless podcast, they talk about it in depth for hours. Mind blowing stuff
Can someone explain what "sticker money" is?
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I'm watching DH winter on twitch, but since I'm not a subscriber I cant ask there.
The casters were talking about players getting "sticker money" but they didn't explain what it is. I tried google without any luck.
TL;DR: What is "sticker money"?
Top Comment: The money the teams get from the sticker sales.
Can someone please explain how Zown makes money? : RealEstateCanada
Main Post: Can someone please explain how Zown makes money? : RealEstateCanada
can anyone explain how my put lost money today while moving into the money?
Main Post: can anyone explain how my put lost money today while moving into the money?
Top Comment:
It’s always Delta, Theta, Vega, or Rho.
Was it delta? No, the stock moved in your anticipated direction.
Was it theta? Probably since theta is a very high % of the value of the option and expiration is tomorrow and you haven’t hit your breakeven.
Was it Vega? No, because implied volatility across SPY options didn’t move much according to the ImpVol study on Think or Swim.
Was it Rho? No. Rho barely moves the needle, especially for near-term options.
So it’s theta.
If you don’t know why your option lost value when it went your anticipated direction, it’s basically always either Theta or Vega or both.
ELI5:Money
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I can't seem to understand the concep of money. Please explain it to me.
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I also don't understand crayons. Or eating.
ELI5 how does money works and why the whole "just print more dollars" is wrong?
Main Post: ELI5 how does money works and why the whole "just print more dollars" is wrong?
Top Comment: "How money works" is a pretty big subject. Money works because it's useful and it's trusted. What is money useful for? It has three main functions: A unit of account - imagine you want to know compare how much effort and resources go into making something. Or if you want to keep track of how much a load of different people owe you. It helps to have a single unit to keep track of all this. Instead of saying "this cost two hours, three plans of wood and 15 nails" you can say "this cost £50". A store of value - imagine you're a farmer and your crop of apples all ripen in the autumn. You've got loads of fresh apples to trade in the autumn, but what about the rest of the year? You need to store your excess somehow. You could try storing apples, but they won't keep all year. It's easier to store money, and money is fairly stable in value (unless things go wrong). A medium of exchange - if I want something from you, I can give you money for it. I don't have to find a good or service you want - like a chicken or a massage (barter). Or you don't have to trust that I'll pay you back with something roughly equivalent at some point in the future (reciprocity). Everyone accepts money, because they have trust in it and they know everyone else accepts it, so they can exchange it for something else they want. When it comes down to it, you can always use it to pay your taxes (or fines). What about trust? In some times and places money was made of actual rare and precious things like gold or silver. Governments couldn't simply print more because they needed gold or silver. And even if a government collapsed - well, you'd still have some gold or silver to trade. These days those limits don't apply. A government could create as much paper or electronic money as it wanted, which would cause a load of problems (see below). So why do we trust them not to? Or trust them not to decide our money can't be used to pay taxes any more, or anything like that? Well because money is useful, particularly for many rich and powerful people and organisations, there's a lot riding on making it work. Now why is "print more dollars" wrong? Well you can think about money in a similar way to any other commodity. The more of it there is around, the less it's worth. That might seem weird: isn't a dollar worth a dollar? Well that shows how used you are to using money as a unit of account! Money is worth whatever you can exchange it for. If you used to be able to buy two apples with a dollar, but now you can only buy one, that dollar is worth less. With a number of pretty important exceptions, if you print more money, the amount of "stuff" in the economy - the things people actually eat, use, enjoy, etc. - doesn't go up. Instead the value of the money goes down. This is "inflation". Those exceptions are important though. There are plenty of other factors that influence inflation and the impact of changing the amount of money in circulation, such as how fast money is being spent and going round the economy (the "velocity" of money). In fact, because the amount of stuff produced is generally going up, it's usually a good thing to also have the amount of money go up. There are plenty of historical examples of economies really struggling because of a shortage of money. (edit: tweaked the wording of the last two paragraphs a little, because the way I put it was a little circular.)