Resource based trade Vs paper currency

Paper money is one of the most significant inventions of mankind. All the alternative solutions we have today in the world deals with solutions in the monetary system. Like it or hate it, their is no possibility of a bartering economy replacing paper currency.

In our culture, a day without ugali is like sleeping without eating anything even if someone ate rice, someday ,my mum send me to exchange eggs with maize flour and salt but unfortunately we have to go on with the bartering economy, in this economy storing the goods is very hard because some of them may end up mixing like mine, actually that day we had to eat ugali without the vegetables. Actually when dealing with paper currency, it is easy to carry the cash around and being unnoticed though some critics argue that it is expensive carrying wallets, is not compared to carrying a sack of maize.

Paper currency still has a very relaxing and permanent effect on how we do business today. It was mainly created to speed up the process of doing business due to the sluggishness that had been witnessed while doing business in the bartering economy.

Humans have proven to be full of ideas but replacing the paper currency economy with the resource based economy will lead to their downfall. How? This is because bartering will limit the business to be done in the same locality. Moving with bulky goods from one place to another might be tedious.

After all the movements you end up not getting the goods you needed which money would have already done. This will mean the seller has to go through intermediaries to get the goods he or she wants. This is very difficult and time wasting in the modern community.

Paper currency still has a very real significant and permanent effect on how we do business today. Paper money has a common measure of value compared to bartering where their is no measure of value and a lot of time is wasted bargaining whereby the value of the goods might end up decreasing in order for the trading parties to agree.

It is elastic in the sense that its quality can be increased or decreased by the currency authority involved. Unlike bartering where the value of goods just decreases over time.

No one on the right mind will allow the division of his cow in order to pay for a pair of shoes! In a bartering economy, their is lack of divisibility of goods. Paper currency allows for division and hence making it convenient and economical.

In the bartering economy, their are no binding contracts and also their is difficulty in making deferred payments. This is because there are no satisfactory units where a deferred contract can be written, controversies regarding the quality of goods and services to be paid in the future might arise as well as both parties fear the risk of the goods increasing or decreasing their value.

In conclusion, as once said, we can not solve our problems with the same thinking we used to create them. So, despite the many advances in the modern economy, paper currency had a significant impact on how we operate ,therefore if paper currency is ssued and regulated carefully, it has less disadvantages as compared to bartering economy.