Representative money: Difference between revisions
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opening sentence is ambiguous in that it's not clear what the examples represent, the commodity or the money. The article is inconsistent internally, it defines the term in a single way not universally accepted. |
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[[File:Money (reais).jpg|thumb|right|200px|Bank notes which represent a claim on gold or silver might be called |
[[File:Money (reais).jpg|thumb|right|200px|Bank notes which represent a claim on gold or silver might be called ''representative money.'']] |
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'''Representative money''' is a financial instrument that documents existing value based on some underlying valuation system and is uses as [[money]]. |
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| ⚫ | The underlying value may be a claim on a [[commodity]]<ref name=mundell>Robert A. Mundell, [http://www.columbia.edu/cu/economics/discpapr/DP0102-08.pdf The Birth of Coinage], Discussion Paper #:0102-08, Department of Economics, [[Columbia University]], February 2002.</ref>, such as [[gold]] and [[silver]], which case [[gold certificates]] and [[silver certificates]] are examples of representative money.<ref>Jon Hooks, ''Economics:fundamentals for financial services providers'', [http://books.google.com/books?id=wfbfki5YB0UC&pg=PA201&lpg=PA201&dq=Money+representative&source=bl&ots=USQtydC41G&sig=lKY0bdbYnY9T2_d82K-Dvd9bgXY&hl=en&ei=D0OoSsrLHo7_nQfqnt2TBA&sa=X&oi=book_result&ct=result&resnum=6#v=onepage&q=Money%20representative&f=false p. 201] ISBN 0899824943, 9780899824949 Retrieved Sept-9-09</ref><ref>William Howard Steiner, ''Money and banking'', [http://books.google.com/books?id=gq6CAAAAIAAJ&q=representative+money#search_anchor p.30], H. Holt and company, 1941.</ref> [[John Maynard Keynes]] however, classified this as ''commodity money'', and characterized representative money as consisting of ''fiat money'' and ''managed money''.<ref>J. M. Keynes, ''Treatise on Money'', 1930</ref> |
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According to economist [[William Stanley Jevons]] (1875), representative money arose because metal coins often were "variously clipped or depreciated" during use, but using representations for the value stored in banks ensured its worth. He noted that paper and other materials<!--was 'substances', but paper is not a substance--> have been used as representative money.<ref>[[William Stanley Jevons]], [http://www.econlib.org/library/YPDBooks/Jevons/jvnMME16.html ''Money and the Mechanism of Exchange''], Chapter XVI, "Representative Money," Retrieved June-29-2009</ref> |
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| ⚫ | Representative money may also refer to [[credit money]] or [[fiat money]]. In 1895 economist [[Joseph Shield Nicholson]] wrote that credit expansion and contraction was in fact the expansion and contractions of representative money.<ref>[[Joseph Shield Nicholson]], ''A treatise on money and essays on monetary problems''], Chapter VI, Effects of Credit or "Representative Money" on prices, [http://books.google.com/books?id=iiQMAQAAIAAJ&pg=PA72&dq=%22representative+money%22&ei=sWvzSoKhLpecyASekICpBg#v=onepage&q=%22representative%20money%22&f=false p. 72-74], A. and C. Black, 1895.</ref> Writing in the 1920s and 1930s, [[John Maynard Keynes]]' divided representative money into ''fiat money'' and ''managed money''.<ref>J. M. Keynes, ''Treatise on Money'', 1930</ref> Economist [[Robert A. Mundell]] contests the division stating it fails to recognize there is a continuum between [[commodity money]] and [[token money]].<ref name=mundell>Robert A. Mundell, [http://www.columbia.edu/cu/economics/discpapr/DP0102-08.pdf The Birth of Coinage], Discussion Paper #:0102-08, Department of Economics, [[Columbia University]], February 2002.</ref> In 2009 an academic paper on "cashless transactions" stated that "''The system of commodity money in many instances evolved into a system of representative (fiat) money.''"<ref>Jashim Khan, Margaret Craig-Lees, [http://revistas.ulusofona.pt/index.php/iber/article/viewFile/859/696 Cashless transactions: perceptions of money in mobile payments], International Business & Economics Review, vol.1, n.1, 2009, ISSN 1647-1989</ref> |
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Historically, the use of representative money predates the invention of [[coinage]].<ref name=mundell/><!--this aspect should be discussed further as well--> |
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*[[Gold standard]] |
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==References== |
==References== |
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Revision as of 17:51, 6 December 2009
Representative money is a financial instrument that documents existing value based on some underlying valuation system and is uses as money.
The underlying value may be a claim on a commodity[1], such as gold and silver, which case gold certificates and silver certificates are examples of representative money.[2][3] John Maynard Keynes however, classified this as commodity money, and characterized representative money as consisting of fiat money and managed money.[4]
According to economist William Stanley Jevons (1875), representative money arose because metal coins often were "variously clipped or depreciated" during use, but using representations for the value stored in banks ensured its worth. He noted that paper and other materials have been used as representative money.[5]
Representative money may also refer to credit money or fiat money. In 1895 economist Joseph Shield Nicholson wrote that credit expansion and contraction was in fact the expansion and contractions of representative money.[6] Writing in the 1920s and 1930s, John Maynard Keynes' divided representative money into fiat money and managed money.[7] Economist Robert A. Mundell contests the division stating it fails to recognize there is a continuum between commodity money and token money.[1] In 2009 an academic paper on "cashless transactions" stated that "The system of commodity money in many instances evolved into a system of representative (fiat) money."[8]
Historically, the use of representative money predates the invention of coinage.[1]
See also
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References
- ^ a b c Robert A. Mundell, The Birth of Coinage, Discussion Paper #:0102-08, Department of Economics, Columbia University, February 2002.
- ^ Jon Hooks, Economics:fundamentals for financial services providers, p. 201 ISBN 0899824943, 9780899824949 Retrieved Sept-9-09
- ^ William Howard Steiner, Money and banking, p.30, H. Holt and company, 1941.
- ^ J. M. Keynes, Treatise on Money, 1930
- ^ William Stanley Jevons, Money and the Mechanism of Exchange, Chapter XVI, "Representative Money," Retrieved June-29-2009
- ^ Joseph Shield Nicholson, A treatise on money and essays on monetary problems], Chapter VI, Effects of Credit or "Representative Money" on prices, p. 72-74, A. and C. Black, 1895.
- ^ J. M. Keynes, Treatise on Money, 1930
- ^ Jashim Khan, Margaret Craig-Lees, Cashless transactions: perceptions of money in mobile payments, International Business & Economics Review, vol.1, n.1, 2009, ISSN 1647-1989