A person cannot overstate the role of money in free markets. I recall an economist stating that you cannot understand economics until you understand money. I believe that this statement holds a great deal of truth.
Understanding money as a lot of aspects: who creates money, how does money get created, what role does money play as a medium of indirect exchange, etc. The complexity of money and the related topic of banking will require more than a single article. I will try to keep these articles as concise as possible and, where I require more detail, I will refer to explanations posted on The Free Market Center.
For now, keep these following ideas in mind:
- Money has a special use as a general medium of indirect exchange. Keep in mind the significance of the words “general” and “indirect.”
- Although money has a special use, it consists of a commodity like any other commodity.
- As a commodity, it has the same source and measure of value as any other commodity (I will discuss the principles and theories of value in the “Fundamentals” section.)
I will expand on these ideas as I write and post articles about money.