What is the nature and function of money

1, the essence of money

The essence of money is fixed to act as a general equivalent commodity, reflecting the social and economic relations between commodity producers.

The reason why money can express the value of other commodities is that gold or silver itself is also a commodity and has value.

2, the function of money

The function of money refers to the role of money in social and economic life.

Money has five functions, scale of value, means of circulation, means of storage, means of payment and world currency.

Expanded Information:

I. Nature

Money by its very nature is contract between owners regarding the right of exchange, and the different forms of money are unified in nature. In the past, because people do not understand the nature of money, the wrong from different angles to the currency into different kinds, for example: according to the commodity value of money into debt and non-debt money two categories;? According to whether or not to agree on the exchange ratio of precious metals is divided into convertible and non-convertible currency and so on.

Money from the form, according to the commodity value of money can be divided into physical money and the form of money, physical money itself is a special commodity, contains the amount of value, such as sheep, precious metals, etc.; and the form of money itself does not have the amount of value, it is contractually agreed upon the value of the contract value only.

The two forms are different, but the essence of the unity, that is, are agreed as a medium of exchange, there are contractual value. The purchasing power of money is determined by the contractual value of money, but the purchasing power of physical money is also affected by its own commodity value, usually the commodity value of physical money is less than its contractual value as money.

Second, the function

In the market economy, money has five functions, the scale of value, means of circulation, means of storage, means of payment and the world currency. Among them, the scale of value and means of circulation is the two basic functions of money.

1, the scale of value

①meaning: the scale of value refers to the currency as a measure of the value of goods social scale. The reason why money can perform the function of the scale of value, because the currency itself also has value, and therefore can be used as a measure of its own value to measure the value of other commodities contained in the amount.

②The function of money as a measure of value is characterized by the need for only the concept of money.

③The amount of value of a commodity is measured by the amount of labor condensed in the commodity, therefore, the amount of labor condensed in the commodity is an intrinsic measure of the value of the commodity. However, the amount of value of commodities can not be expressed directly in terms of labor time, but only indirectly in the exchange process through the amount of money equal to how much.

Therefore, money as a measure of value is nothing but an extrinsic measure of the value of commodities, which is a necessary expression of the intrinsic value of commodities, i.e., labor time.

2, means of circulation

①meaning: means of circulation means that money acts as a medium of exchange of goods.

② money to perform the function of the means of circulation, which is characterized by the reality of the money must be money, but can be undervalued money, and therefore can be paper money.

③ the circulation of goods. Money as the medium of exchange of goods called commodity circulation. Commodity circulation formula is: commodity (W) - money (G) - commodity (W). Currency as a means of circulation, so that the commodity exchange is separated into buying and selling two acts, breaking through the barter exchange in time and space restrictions, thus facilitating the development of commodity exchange. But as a result, there may also be a disconnect between buying and selling, thus giving a formal possibility for economic crises to arise.

4 Money circulation. The constant movement of money as a medium of circulation of goods is called money circulation.