near money definition This is a topic that many people are looking for. star-trek-voyager.net is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, star-trek-voyager.net would like to introduce to you Barter, cash and bank deposits, cheques, near money and liquidity. Following along are instructions in the video below:
“This video. We re gonna take a look at some basic concepts around money. But but before we do that we should give a basic understanding of what is meant barter double coincidence of wants then we re going to clarify some terms that relate to cash and money. So you have a clear understanding of what we need to know before we progress.
And i want to start with this image. Which is somebody offering free house painting in exchange for an older car or motorcycles and scooters. So there s no money being exchanged here and that s exactly what bartering is it s a type of trade in which goods or services are directly exchanged for other goods and or services. Without the use of money so you ll notice this person is offering a service.
They re looking for a good. There s no money being exchanged that s the key thing to know. But the problem is with money let s say for example you re looking at these two figures here the figure on the left has like a clear stone. The figure on the right has what looks like a maroon color stone.
If the figure on the left. Once a maroon stone. And is willing to offer a clear stone in exchange and the person on the right. Once a clear stone is willing to offer the maroon stone.
Then this works out. But they have to have the exact thing the other person wants in exchange and it has to be perfect. And if there s any mismatch. Then there s an issue and that condition where i have what you want and you have what i want is called a double coincidence of wants and that is what is necessary for a trade to go down.
Essentially what needs to be offered on both sides for the exchange to occur now moving on i wanted to show you a picture of a bank vault. Because we re going to talk about banks in a moment. Then the first part. I wanna address here is cash so cash.
If you see i m dragging the mouse over cash can be paper currency or coins. So i have some coins on my desk. That you re probably hearing right now. It s going to be either the notes or the currency or the coins.
And that s cash and bank deposits are different bank deposits. I can take my cash and put it at the bank or maybe i could put a check and deposit. A check at the bank. The bank doesn t necessarily store that cash physically.
It can be an electronic account of what i have at the bank. So if you think that you drop your money off when you take your money and you put at the bank. They don t necessarily keep physical currency. There it s electronic record.
So there s a difference between these two writing a check is essentially telling a bank. What to do with your money and where to send it so that s what it is a check is a document ordering the bank to pay money from your account to a payee right somebody you want to give money to but again you might write a check to somebody and there might not be any physical currency that exchanges you right person x. A check. They deposit at their bank and the bank has a an account for that person and now your bank is sending money to that bank.
It could be all electronic. Most likely. It is electronic finally we have the quiddity and this concept of near money. So what i want to do is identify and clarify what is meant by near money.
This is a little bit tricky. But if you follow my explanation hopefully it makes sense near money is not money. But it s something that can be easily turned into cash. Very quickly like let s say for example.
If i had a house. A house is not very quick to turn into cash unless you lose a lot of the value of it. But maybe you have something like a certificate of deposit or a money market account or a kind of a bond from the government that it s worth something that will retain its value if you sell it and very quickly becomes cash without losing much value and liquidity is that ability to turn into cash right turning an asset into cash and how quickly and how little loss of value occurs. When that asset is turned into cash so if you have a house like i said before you sell it you were probably gonna lose a lot of the value if you sell it immediately at a deep discount to get cash right away.
But if you have a government bond that you sell i highly doubt you ll lose much value. If any on the sale of that bond so liquidity and mere money hopefully. These clarify for you the different degrees or help you understand how financial assets can have different degrees of liquidity and those things that are closer to cash are going to be considered near money those things that are harder to turn into cash without losing value will be further away so if i go back to the beginning and we look at our objectives. Hopefully by now you understand what is meant by barter.
The double coincidence of wants and you can define cash liquidity your money in bank deposits. With this basic understanding. You should be able to move in to an introductory understanding of money and ” ..
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