The concept of money

Last night as I was wasting my precious time on TikTok, I stumbled across a video of one creator talking about how he is baffled by how money works. And his thinking is actually one that I’ve unlocked before by overanalyzing the meaning of money and crossing over shortly into a derealization episode.

When we talk about money, we simply understand it as what we need to buy something. Or what we get when we sell something. That’s the basics of it. But why do we use it as a means of payment and means of accepting payment?

I meann…money itself is not what we need. What we need is what we use the money to purchase. So why do we work all our lives for something we don’t really need?

Convenience as a store of value

This would be the short answer. Or one of them.

If you think back to our high school days when we learnt the barter trading system, it was obvious how hectic that system must have been. Where you had to go to a market or roam a neighborhood to find someone that has something you want and is interested in what you have, to make a deal.

Say an indivudual wanted a sneaker, but is a farmer who just harvested some beans. Without money, they’d have to go on a hunt for someone that has a sneaker but needs beans. Imagine what the odds of finding such a person would be.

But this is where money comes in. Money replaced the bartering system, eliminating the need to go on this wild goose chase, by introducing a neutral entity that everyone agrees is worth a certain amount of everything we know. A dollar is equivalent to 3 bottles of water, a medium size coke (probably), a pack of pasta, maybe even a can of soda.

Money as a piece of paper itself is meaningless

It only represents the value of something, an asset. Which is why networths are not calculated based on how much money you have, but on the value of your assets. Because the assets are what you actually have. The money is just something in your possession for a short while that you can use to exchange for real assets you actually want.

If all of the money ( or more appropriately, currency) in Ghana were to burn overnight, the government will simply issue a reprint of the total currency that should’ve been circulating. The country’s value is not affected by this because _{ding ding} the money doesn’t represent real value. Just a store of the value.