dollar, because the dollar has more stable value than the local currency. In many countries with a history of high inflation, such as Argentina, Israel, or Russia, prices may be quoted in a different currency, such as the U.S. New money may substitute for old under less extreme conditions. If the social arrangement that sustains money as a medium of exchange breaks down, people will then seek substitutes-like the cigarettes and cognac that for a time served as the medium of exchange in Germany after World War II. When great increases occur in the quantity of these pieces of paper-as they have during and after wars-money may be seen to be, after all, no more than pieces of paper. The strength of the convention is, of course, what enables governments to profit by inflating (increasing the quantity of) the currency. At bottom money is, then, a social convention, but a convention of uncommon strength that people will abide by even under extreme provocation. This common knowledge makes the pieces of paper valuable because everyone thinks they are, and everyone thinks they are because in his or her experience money has always been accepted in exchange for valuable goods, assets, or services.
People accept money as such because they know that others will. Whence the difference? The easy answer, and the right one, is that modern money is a social contrivance.
The piece of paper labeled 1 dollar, 10 euros, 100 yuan, or 1,000 yen is little different, as paper, from a piece of the same size torn from a newspaper or magazine, yet it will enable its bearer to command some measure of food, drink, clothing, and the remaining goods of life while the other is fit only to light the fire. The subject of money has fascinated people from the time of Aristotle to the present day. It is the medium in which prices and values are expressed as currency, it circulates anonymously from person to person and country to country, thus facilitating trade, and it is the principal measure of wealth. Money, a commodity accepted by general consent as a medium of economic exchange. SpaceNext50 Britannica presents SpaceNext50, From the race to the Moon to space stewardship, we explore a wide range of subjects that feed our curiosity about space!.Learn about the major environmental problems facing our planet and what can be done about them! Saving Earth Britannica Presents Earth’s To-Do List for the 21st Century.Britannica Beyond We’ve created a new place where questions are at the center of learning.100 Women Britannica celebrates the centennial of the Nineteenth Amendment, highlighting suffragists and history-making politicians.
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