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| | Never in its history has the United States issued a $1 million bank note. However, that did not stop a woman in the Atlanta area from trying to cash a $1 million bill at Wal-Mart. According to police in Covington, an Atlanta suburb, Alice Pike initially tried to use two Wal-Mart cards to pay for over $1,600 in merchandise. In fact, on the two cards, she had only $2.32 in credit left. Thankfully, she had a $1 million bill in her purse. She handed the bill to the cashier and asked for change, of course. The cashier became suspicious and called a manager who in turn notified the police. When the police arrived, Pike said she obtained the $1 million from her husband. She had two more $1 million in her purse.
Money history: Gold Standard:
In the second half of the XIX century, with the discovery of auriferous veins in America, as well as due to the fact that the British Empire at that time operated on the full gold standard almost half a century, other European countries also started shifting over to it. Soon France, Germany, Holland and the Scandinavian countries adopted a de jure, or de facto gold standard, and the associated mass ejection of silver on the world market has caused a catastrophic devaluation of currencies of China, Japan and other countries in Southeast Asia. Classical gold standard has existed immediately before the First World War and for its brief duration it could bring prosperity and wealth to the participating countries. Or that's what the politicians wanted to consider, who have twice attempted to revive it. In modern economic theory, there will not be an unified answer to the question of what caused the stability of the pre-war Europe - the existence of the gold standard, or its underlying factor - the mutual trust of people, institutions and governments. Anyhow attempts to revive the fantastic era in Europe and the U.S. - first in gold bullion (1926-1931 years), and then in a gold exchange (1944 - 1971's) standards have absolutely failed. Now, on paper money it is not written as before that: "Bank notes backed by gold, precious metals and other assets of state-owned bank."
What will replace cash?
Recently, a representative of the famous American dynasty of oil industrialists and philanthropists Gordon Getty said that after some time, circulation of USD will be minimized, and its place will be occupied by completely new financial instrument called the security money, or money as securities. As conceived by Getty, they will be formed from all kinds of money: the actual cash (notes and coins), open-ended bank deposits, time deposits, consumer loans and installments, loans, etc. As the amount of money in the state is formed not only from the cash, alike in the new system, anyone can create something like a virtual (as all transactions take place on the Internet) cash brief-case, not only from the fact that there is clanking in his pocket. Payment for goods and services can be made, sharing installments of these portfolios with each other. Moreover, security money by itself will become a means of multiplying wealth not just by replenishing bank account, but getting returns on different kinds of money contained in the brief case.
Presume that you have 1,000 dollars. You will invest 500 of these as paper money, 300 - on term deposit in a bank, and balance 200 - in the shares of Gazprom. Now, suppose that you wanted to buy a sofa for $ 500 and instead of giving the seller five "green" notes, you present only two plus two-thirds of their term deposit and half of your stake in Gazprom. Everybody is happy. You - because the structure of your briefcase has remained the same and your income in stocks and fixed-term deposits are not lost. The seller - because he had received just such a payment, which he wanted.
In the networks of mutual responsibility:
Today we live in a world based on a unique monetary system – there were no analogues to it until the mid XX century. After all, our entire economy is based essentially on trust. Cash that we pay for goods at the store, credit networks Visa and MasterCard, Electronic payment systems like PayPal or WebMoney, which allow to make payment with lightning speed - all this exists in our collective imagination and is in no way secured, except for certain branched structure of public obligations, simply speaking, mutual responsibility, based on the guarantee of States and central banks.
As of now, as long as this collective responsibility is strong, money has purchasing power. If it is someway violated - for example, that the state does not keep up its commitments, or the citizens suddenly hear on TV the news about the banking crisis and decide to pick up all their savings, or will quickly spend the cash, expecting that tomorrow they will depreciate - and the money will lose value at breathtaking speed becoming literally cheaper than the paper, on which it is printed. In order to avoid such developments and to monitor the value of own currency, central banks hold a monetary policy, and accumulate gold-exchange reserves.
The most enormous inflation in the history of mankind, which has depreciated since the Second World War, the Hungarian currency - Pengo, occurred in 1946. Guinness World Records recorded the release of notes in Budapest in a billion billion (1000 trillion) Pengo. You probably can guess what happens in the event of such inflation: shrugging shoulders, people will return to commodity money and barter. |
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