There is too much confusion between Money and Currency.
Now, there is two Concept exists that must be understood and that is
1. Money is unreal, meaning imaginary, intangible.
2. Currency is NOT Money, but merely represents Money
Money is unreal and Imaginary
It is absolutely imperative that you understand that money exists only in the human mind. You cannot hold money in your hand, not you not anyone. Money exists as an unreal concept to enable us to run our economy easier.
Some analogies from our every day life will help to explain concepts. Let’s consider 3 Apples. The Apples are real, but 3 is unreal. Instead of saying Apple, Apple, Apple we can say 3 Apples. That is convenient. We are using an unreal idea to make communication easier.
In our school days, in Algebra we learned that ‘x’ could be equal to something we needed to find. That ‘x’ is certainly unreal, but it is useful in finding an unreal number that can be attached to something real. In Algebra we use something unreal to find real and it works well to our benefit.
Than we learned about negative numbers. They are appropriately called imaginary and minus. Negative numbers can exists only in human minds, but they are handy to use to find other numbers and to represent an absence. A negative amount of money can mean how much we must dig up to pay our bills.
If you continued in Math, you learned about i, the square root of minus one. It does not exist and cannot be changed to real number. But its concept is handy to use in finding other numbers.
For those who don’t like Math’s, let’s take a look at literature. There is fiction, which means unreal, and there is non-fiction which means real. Fiction is a story that never was real. Non-fiction is a story that once was real.
Now, apply that idea to Currency and Money. Currency is something real that we use to represent something unreal money. This is convenient. We cannot hold unreal money in our hands, but we can grasp and trade real currency that represents our unreal money.
Currency is not money. It merely represents money:
Since money is unreal, we need something we can get our hands on to use in our daily lives. So, we use our human mind and invented printed currency to represent money. Now we have something real that we can hold in our hands and used to exchange value. And that is where we get into a heap of economic trouble. People get to think that printing currency is printing money, but that is far from the truth. Printing currency is just that simply printing ink on paper.
Currency is printed on paper or minted from cheap metal
Money is created, Not Printed.
We can’t print something that is imaginary
When you apply for a loan in any bank, bankers create money by making an entry in a ledger, usually in a computer. Then he enters that amount in your checking account and poof! That money is created out of nothing, just like that. Then you can start writing checks. That banker created that money out of nothing, and now you must pay him interest for it.
Well, now, let’s stop to think about for a while. If money is created by making an entry in a ledger, then that money must be imaginary. Indeed money is totally unreal. The real paper and metal that we hold in our hands is currency that only represents unreal money.
But important fact is
The amount of currency we have depends on the amount of money in the economy. If we are short on money, we run short on currency.
