Barter and Monetized Systems of Exchange Essay Example | Topics and Well Written Essays - 1000 words

Barter and Monetized Systems of transfigure - Essay ExampleBarter and Monetized Systems of ExchangeDifferent items nurse worked as cash at different times. For instance, tobacco in America, chisels in China, gold until the gold standard was abandoned in the 1930s and paper currencies thereafter. Exchange of goods and services people produce and want is critical to satisfying the diverse wants of everyone. Such change is possible by using either the commerce organisation or money as a medium of exchange. Barter was prevalent medium of exchange before the advent of money. It remains the principal form of exchange even today in tribal and handed-down societies where political institutions are primitive, economies are not yet monetized and social systems are based on traditional practices and communal support. Even in advanced societies and economies like the United States, barter is still carried out to a limited extent in rural areas and globe and charitable activities. On the other hand, modern societies and economies like that of the United States rely on money as the main medium of exchange. They have the highly true political institutions to regulate money and prevent exploitation, manipulation and profiteering that money makes possible they have monetized economies that help create and accumulate wealth and they have social sentience that is necessary for people to trust an intrinsically worthless currency note, a mere piece of paper with the central banks assurance in small prints, as a medium of exchange. Barter and monetized systems of exchange have their own advantages and disadvantages (benefits and costs). ... Third, since commodities and services are exchanged directly, there are no unknown exchange fluctuation or balance of trade and payment crises. Fourthly, the division of labor is clear, as one produces what one has the means to do. Barters Disadvantages The barter system has several serious disadvantages too. First, coincidence of want s might be difficult unless the net is cast widely, which makes trade cumbrous. Secondly, in barter, there is no common footprint of value making it difficult to ascertain, say for instance, how many loaves of bread would be equivalent to a cow if one wants to sell bread and the other cows. Third, in many cases the commodity one wants to sell, as the cow here, might be indivisible to sell in parts to buy a few loaves of bread. Fourth, commodities and animals ofttimes deteriorate in value fast and cannot be stored for long, which makes accumulation and storing of wealth difficult. Fifth, barter makes deferred payment and contractual deal problematic. Sixth, transporting bulky commodities from place to place becomes cumbersome in a barter system of exchange. Moneys Advantages To avoid repletion of what has been already said, money takes care of all of the disadvantages of the barter system of exchange. sacristan describes the functions of money as a medium of exchange, a measure of value, as a store of value, and as a means of deferred payment (792-794). Briefly speaking, when money is used as a medium of exchange, there is no need for coincidence of wants. Money represents the common measure of value it is divisible into small and extended amounts it can be stored almost forever if it is put away safely it makes deferred payment easy and