ECO 1302 Chapter Notes - Chapter 12: Business Cycle, Landing Vehicle Tracked, Chartalism
14 Mar 2017
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There are two concepts of money: the metallist or commodity view of money, which sees money as evolving from barter exchange, and the state or chartalist theory, which sees money as a creation of the state. It is more efficient to exchange goods and services by using money as a medium of exchange than by bartering them directly. In addition to being the medium of exchange, whatever serves as money is likely to become the standard unit of account and a popular store of value. Throughout history, all sorts of items have served as money. Commodity money gave way to full-bodied paper money (certificates backed 100 percent by some commodity, such as gold), which in turn gave way to partially backed paper money. Nowadays, our paper money has no commodity backing whatsoever; it is pure fiat money. A narrow definition of the canadian money supply is m1+, which includes coins, paper money, and chequable deposits in all financial institutions.
