Assessing the value of money – the base to upgrade the global monetary and finance system

Sailau Baizakov ()

No 5666, EcoMod2013 from EcoMod

Abstract: The essence of money is its cost. And the value of money, by definition, is serving, above all, as the measurement for the price of goods and services. I.e. the essence of money is their ability to become a single scale for measurement of goods and services. This ability is due to the international consensus which has linked the price (value) of money to the quantity of goods and services which is exchanged for the currency units such as Tenge, Dollar, Ruble etc. The essence of money is its function to serve as the instrument of: - measurement of value, - goods circulation velocity, - saving wealth by private individuals and legal persons, - circulation as the world currency. Therefore, the purchasing power of money is defined within the frames of its functions. So, e.g., as the measurement of value money assess the prices of goods. Then supporting the process of goods mass circulation, the money itself engage in circulation. The circulation of goods and money flows may be faced with the gap which may cause the crises in economy. Therefore in economy management it is common to quarterly measure the difference between the nominal GDP and the real GDP. It is also assumed that the former is the result of the money circulation in nominal terms whereas the latter represents the results of goods circulation in the prices of the base period (in constant prices – translator’s note). The official statistics name this as the GDP deflator. It is accepted that the GDP deflator (or in other words the index of money inflation) – is the whip for the market economy and is therefore controlled by the government. The ability to use the money as payment tool may become the reason for the financial crises related to debt situations. The current crisis in EU countries is the financial crisis, crisis of external debts. The external debts depend not only on the amounts of debts but to some extent on purchasing power of trading partner currencies. From this it stems that in order to have the complete model of analysis in economic growth factors, it should consider not only the quantitative but also qualitative indicators of all three levels of economic cycle of money and goods: real sector, financial sector, and national economy as a whole (presumably comprising the government and external sectors – note by translator) See above See above

Keywords: NA; Monetary issues; Monetary issues (search for similar items in EconPapers)
Date: 2013-06-21
New Economics Papers: this item is included in nep-mac and nep-mon
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