Representative money or receipt money is any medium of exchange, printed or digital, that represents something of value, but has little or no value of its own ( intrinsic value). Unlike some forms of fiat money (which may have no commodity backing), genuine representative money must have something of intrinsic value supporting the face value. [1]
More specifically, the term representative money has been used variously to mean:
- A claim on a commodity, for example gold and silver certificates. [1] [2] [3] In this sense it may be called " commodity-backed money".
- Any type of money that has face value greater than its value as material substance. Used in this sense, most types of fiat money are a type of representative money. [4]
There is no concrete evidence that the clay tokens used as an accounting tool to keep track of warehouse stores in ancient Mesopotamia were also used as representative money. [5] [6] However, the idea has been suggested. [1]
In 1895 economist Joseph Shield Nicholson wrote that credit expansion and contraction was in fact the expansion and contraction of representative money. [7]
In 1934 economist William Howard Steiner wrote that the term was used "at one time to signify that a certain amount of bullion was stored in the Treasury while the equivalent paper in circulation" represented the bullion. [3]
See also
References
- ^ a b c Robert A. Mundell, The Birth of Coinage, Discussion Paper #:0102-08, Department of Economics, Columbia University, February 2002.
- ^ Jon Hooks, Economics:fundamentals for financial services providers, p. 201 ISBN 0-89982-494-3, ISBN 978-0-89982-494-9 Retrieved September 9, 2009
- ^ a b William Howard Steiner, Money and banking, p. 30, H. Holt and company, 1941.
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^ John Maynard Keynes (1965) [1930]. "1. The Classification of Money". A Treatise on Money. Vol. 1. Macmillan & Co Ltd. p. 7.
Fiat Money is Representative (or token) Money (i.e something the intrinsic value of the material substance of which is divorced from its monetary face value)
- ^ Denise Schmandt-Besserat, Tokens: their Significance for the Origin of Counting and Writing
- ^ Keynes, J.M. (1930). A Treatise on Money. Volume I, p. 13
- ^ Joseph Shield Nicholson, A treatise on money and essays on monetary problems], Chapter VI, Effects of Credit or "Representative Money" on prices, pp. 72–74, A. and C. Black, 1895.
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