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Under Gresham's law, "good money" is money that shows little difference between its nominal value (the face value of the coin) and its commodity value (the value of the metal of which it is made, often precious metals, such as gold or silver). [4] The price spread between face value and commodity value when it is minted is called seigniorage.
Commodity money is to be distinguished from representative money, which is a certificate or token which can be exchanged for the underlying commodity, but only by a formal process. A key feature of commodity money is that the value is directly perceived by its users, who recognize the utility or beauty of the tokens as goods in themselves.
The alternative to a commodity money system is fiat money which is defined by a central bank and government law as legal tender even if it has no intrinsic value. Originally fiat money was paper currency or base metal coinage, but in modern economies it mainly exists as data such as bank balances and records of credit or debit card purchases, [3] and the fraction that exists as notes and coins ...
Many items have been used as commodity money such as naturally scarce precious metals, conch shells, barley, beads, etc., as well as many other things that are thought of as having value. Commodity money value comes from the commodity out of which it is made. The commodity itself constitutes the money, and the money is the commodity. [32]
Metallism is the economic principle that the value of money derives from the purchasing power of the commodity upon which it is based. The currency in a metallist monetary system may be made from the commodity itself ( commodity money ) or it may use tokens (such as national banknotes ) redeemable in that commodity.
In the reified perception of the political economists and the vulgar Marxists, products have value because they are expressible in money-prices, but Marx argues [205] that in reality it is just the other way round: because commodities have value, i.e. because they are all products with an average current replacement cost of social labour, [206 ...
Here are the differences between market orders and limit orders, and when to use each one. Market order vs. limit order. The distinction between a market order and a limit order is fairly ...
Money is well-suited to storing value because of its purchasing power. [4] It is also useful because of its durability. [5] Because of its function as a store of value, large quantities of money are hoarded. [6] Money's usefulness as a store of value declines if there are significant changes in the general level of prices. [7]