What are the Properties of Money?

The main properties of money as agreed by most are medium of exchange, a unit of account and store of value. This makes it easy to understand as the function of money can then be universally accepted. Knowing what the properties of money are makes it easy to agree on the definition of what is money.

 Medium of  Exchange

As a property of exchange, money must be able to be exchanged for what one wants. Think if you were to travel from one country to the next one, it is so much easier knowing that the currency that you have will be accepted at the hotel that you are going to stay in. How would it be if everyone was travelling with one form of good or the other. Let us say you bring a cow, another salt, another cabbage and another brings a table. The challenge in this is everyone now needs to figure out how much is enough cows to get land or how many tables does one need in order to purchase a donkey. Not just figuring out what to exchange with people would need to be agreeable to exchange with what it is that you have or are offering. If i take the cow will I have much use for it? Other considerations can then be about the quality of the table that I am exchanging with, how it is made, its size, its state and other considerations that one has to make. Such considerations are why money must be acceptable at a universal stage.

So the property of money is such that it is acceptable as a medium of exchange for one to be at ease and makes economics so much uniform and easy for everyone.

Unit of Account

As humans we understand things better when we can count them and thus quantify them. If I brought a bucket of beans and poured them on the floor, and asked you to tell me how many beans there were, you would struggle but if you were told that there is 1 bucket of beans which is full it makes it easier to understand. If you are told that there are 30 people in the bus, it would  make more sense than being told that there are “people” in the bus. The Unit of account in money means that money can easily be measured such that you have an idea of the price of the thing that you want to buy. A shirt going for 20 dollars makes more sense as you can tell how many units are involved before you buy. If mathematics is a beautiful standard then think of money as the benefactor of that standard.

Store of Value

If  I have land that I can plant maize in today; then I travel for some time to another country and after ten years I am asked what I owned, if I told you I have land which can create a harvest of 200 tonnes, what would you say about what I own. In the end, the value of the land has not changed because I traveled or that time has gone by. It still has value. Such is the case with money that it must maintain its value over time. As a property of money being able to store value is critical as time or places change. Though we have inflation or other forces that might come into play the storage of value remains an important property of money that exists or rather we have found ways to keep using.

In Summary

Money is a useful tool in order to ensure that we all get along in the different societies. We have so much value to exchange between us from assets,labor, goods and services, hence we need an agreed way of exchanging. As a medium of exchange, a unit of account and store of value, money makes it easier for us in the forms that we need.

Sure there are many laws that govern the economics of the day but at the end of the day, think of money as a mental agreement that we have in order to create sanity among-st ourselves and a certain standard of order. It surely would be utter confusion if everyone was just moving on their own whim without any real guidance as to how to exchange or give value to anything.