Serendipity Daily Thoughts

Hey. How are you doing these days? It has been cold in Japan although it is already March.

Yesterday, I wrote how trades of items can be interpreted. Now, let’s think of why we use money as a tool for exchanging items. It seems to be meaningless to introduce money if people can be satisfied with only trading items. However, we do use money to evaluate items. Why is it?

Each person has their own needs and desires hidden under their mind. When people trade items, what actually happens beneath the activity is the exchange of their needs and desires. In other words, people make deals because their demands match with what are supplied in front of them. However, such needs and wants are indeed invisible, so it is difficult to efficiently find the exact person who wants to buy an item that you own and who sells an item that you truly want.

For example, if I want to get a bowl of wheat instead of a piece of chicken, I can go to a market where people gather for trading items, and find a person who sells the wheat and wants the chicken. Probably I will be able to meet such a person and make a deal. But don’t you think it takes much time and effort? I mean, it may be easy to identify a person who wants to exchange their wheat, but how can I know that person also wants to buy chicken. Furthermore, what if another person reaches me and convinces me to sell a piece of chicken in exchange with fish? Considering that there is a chance that I may not be able to trade chicken with wheat but may be able to trade fish with meat, it might be better to exchange some of the chicken I have with the fish. Now, I have a higher possibility to be able to exchange my some of my items with wheat. But am I 100% sure that I can get wheat? – No.

Perhaps we can now understand the greatness of the money. If we can get some pieces of papers in return for selling a piece of chicken and use the papers to buy wheat, it is going to be definitely much easier to fulfill our needs and desires. The person who wanted to sell fish and buy chicken will be able to exchange their fish with chicken using money. To shortly summarize, money is a convenient tool to exchange items among people.

But why does it need to be a piece of paper – why does it need to be imaginary? The answer is so simple. It is because people become likely to keep money if the money itself has value, potentially hindering to trade items using money. Therefore, the “imaginary” gives people incentives to initiate trades with other people.

There seems to be a lot more interesting situations going on along with the current money system, for example how money can be entirely trusted by the society, so I would like to further think of such topics in the future. But for tomorrow’s piece of writing, I would like to explore another significant innovation made by human beings. Thank you for reading through today’s reading. Please feel free to leave comments on anything related to money, such as kinds of questions you have in relation with money.

See you soon!