home Internet Money - essence, functions and types. Functions of money and their characteristics The main functions of money briefly

Money - essence, functions and types. Functions of money and their characteristics The main functions of money briefly

Money is a very interesting phenomenon in our society. Some people never have enough of them, others have nowhere to put them. For some, they are a means of survival, but for others, they are a source of the most unthinkable entertainment, such as a dish of oysters inlaid with gold. Who and when invented them? What are the functions of money and their characteristics?

What is money?

Money is the universal equivalent of all goods, goods and services. Or rather, the equivalent of their value. The history of the emergence of money in mankind goes back to ancient times.

If earlier precious metals acted as money, now, in modern conditions, banknotes express the obligations of the state or the central state bank in the form of banknotes or coins. By itself, that kind of money is worth nothing. It is the obligations of the state that give them value.

Functions of money

It is the purpose of money, their functions, that reveal the very essence of money. The standard classification distinguishes the following functions of money:

Measure of value. This is the ability of money to be a standard for all types of goods and services. Goods may have different weight, texture, dimensions and other physical characteristics and properties. Money is a universal measure, a measure of value, thanks to which two types of value can be compared and a fair exchange can be made.

Recourse tool. Money has properties such as the speed and ease of exchanging it for any goods and services. They, acting as an intermediary, allow the manufacturer to sell goods at one point in time, and buy raw materials a day or a week later in a completely different place. Money removes the limitations of exchange in time and space.

Instrument of payment. With money, you can establish a debt and pay it off. If the goods were borrowed, and subsequently the prices for it changed a lot, the amount of the debt will remain unchanged - because it is expressed in monetary units.

A means of accumulation. With the help of money it is possible to transfer your purchasing power to the future. It happens when we save cash, but do not spend them immediately. This function is performed when money is not involved in circulation.

World money. World money appeared with the development of a system of international loans, foreign trade relations. Such funds act as a universal means of payment or a universal materialization of the wealth of world society.

Characteristics of money

If the functions of money reflect their essence, then their characteristics make it possible to more accurately determine legal concept. There are the following public law characteristics of money:

1. Only coins and banknotes recognized by the state are considered money;

2. money production takes place in strict accordance with state standards and directly with specialized institutions - mints;

3. The state sets the denomination of money arbitrarily, but it is expressed in national monetary units;

4. money is accepted throughout the territory of the country that issued them at face value;

5. illegal production of money and their release into circulation is counterfeiting and entails criminal and administrative liability.

National currency Russian Federation- ruble. The issue of money, control over their circulation and withdrawal is carried out exclusively by the Central Bank of the Russian Federation.

Mezentseva Vasilisa

Initially, the volume of goods produced was relatively small and the exchange of goods between the tribes was of a random nature (all goods produced were consumed) and carried out in kind. Gradually, the volume of production increased and surpluses of goods began to appear. The exchange began to have a permanent, massive character. There was a need for a special means of circulation, with the help of which it was possible to quickly and at minimal cost exchange one commodity for another. Money became such a means of circulation (the first function of money is money as a medium of exchange).

The main property of money is absolute liquidity..

Liquidity is a measure of how quickly an asset can be exchanged for cash.

There are three subsystems in the system of monetary relations:

functional;
economic;
in the shape of .

Functional subsystem

Money It is a means expressing the values of commodity resources currently participating in the economic life of society, a universal embodiment of value in forms corresponding to a given level of commodity relations. Such a definition is built on the concept of value, which is more in line with the approach to money accepted in world science.

In another definition, money is an absolutely liquid medium of exchange that has two properties:

exchanged for any other product;
measures the value of any other good (this function is expressed in terms of price and scale of these prices).

The essence of money is revealed in five functions:

Medium of circulation

Measure of value formed during the formation of the price, it determines the value of the goods, which is measured by money (ie, equalization of goods among themselves). In this way a quantitative measurement is obtained.

The monetary measurement of value is price. It depends on several conditions:

production conditions;
exchange conditions.

In order for prices to be comparable, they must be brought to a single scale.

Price Scale is the weight content of gold or silver, fixed as a unit of measure.

As a measure of value, money can act as a count, appearing in the form of numerical values. Accounting money is used to express prices, accounting and analysis, maintaining accounts of participants in economic life.

Medium of circulation. The monetary expression of the value of goods does not yet mean its realization. There must be an exchange. Money - intermediaries in the exchange from the beginning of the transaction (T - D) to its completion (D - T). During the period of the predominance of trade, money mainly acted as a medium of exchange; after the emergence of credit and the development of the economy, the function of a means of payment comes to the fore, which includes the function of a medium of circulation and is transformed into a function of a means of payment. This is facilitated by the use of plastic cards and other electronic payment instruments that allow paying by transfer from a bank account, as well as making wholesale and retail purchases.

Means of payment– the time of payment does not coincide with the time of payment, the goods are sold on credit, with a deferred payment
(T - O and O - D).

means of accumulation- cash reserve (account balances, gold and foreign exchange reserves). Money, which performs the function of accumulation, participates in the process of formation, distribution, redistribution of the national income, and the formation of the population's savings.

world money used in international payments.

In a modern developed economy, there are three functions of money - a measure of value, a means of accumulation and a means of payment, and the medium of exchange remains in a very small amount.

Economic subsystem

Financial system:

distribution of money in the country;
formation of the budget in the country.

Credit subsystem:

regulates internal and external debt;
forms loan capital;
associated with the circulation of securities;
associated with international credit and currency relations.

There is currently no use of issuing money to cover the deficit. But if there is a federal budget deficit, the government must find sources to cover it. Until 1995, the Russian Federation used a source of coverage that is not typical for a market economy - government loans from the Central Bank. This leads to additional inflation, as additional money is issued into the economy that is not backed by goods.

The use of market mechanisms provides sources for covering the deficit and provides for:

As a result of the issue of government securities, there was a redistribution of money between the subjects of the economy:

persons who had free cash, gave them on credit to the state, having received a bond;
budgetary organizations received financing of their expenses at the expense of this money.

The budget deficit, covering , does not change, inflation does not increase, but the public debt grows.

Funds for the repayment of the state debt are provided in the federal budget in the item "Expenses".

Form of cash flows

commodity money

For a long time, rather rare and expensive goods served as money: cattle, shells, tea, tobacco, rice, salt, fish, furs.

As a result of the internationalization of ties, humanity has come to the noble - gold and silver.

Precious metals were chosen because:

they could keep their value for a long time
were uniform in quality.
had divisibility and high cost (due to the work capacity of their extraction and processing)

Gold and silver have served as money for thousands of years. The final displacement of precious metals from the status of money occurred in the mid-70s of the 20th century, when the demonetization of gold took place - the replacement of gold and other precious metals with paper and credit money.

Money in its development has gone through several forms of material carriers:

1. Commodity, metal money- real or full-fledged money.

Real money is money whose nominal value corresponds to the real value of the metal from which it is made (copper, silver, gold).

The coin had fixed features(appearance, weight content).

2. Substitutes for real money(inferior) - this is money, the nominal value of which is higher than the real value, i.e., higher than the cost of labor spent on their production. These include:

metal signs of value - a worn gold coin, a small coin made of cheap metal (copper, aluminum);
paper tokens of value - made from paper. These are paper money and credit money.

Paper money

The state has the right to issue paper money.

The difference between the nominal value of issued money and the value of their issue forms the share premium of the treasury. The essence of paper money lies in the fact that they are issued for cover and endowed by the state with a forced exchange rate. Paper money is not exchangeable for metal.

Economic nature of paper money:

they are always unstable (they cannot permanently fix their course);
their release is never regulated by the need of commodity circulation in money;
there is no objective mechanism for withdrawing excess money from circulation.

The depreciation of paper money is associated with excessive issuance, a decline in confidence in the government, and an unfavorable country.

loan money

Credit money is a liability, the total volume of contracts concluded, orders placed or services received, which fall on a certain period of time, regardless of when the necessary funds were allocated and when payments will actually be made.

The essence of the loan is that the amount given back will be returned with interest.

Credit money appeared on the basis of the function of money as a means of payment.

There are the following types of credit money:

banknote;
electronic money.

Types of money in the modern world

Types of money in the modern system of monetary circulation

Cash
- Small coin
- Paper money:
  - Treasury notes were issued by the state, did not have a material value, but were required to be accepted in all payments and settlements. Today, in most countries, paper money, due to its ability to depreciate, is replaced by credit money (Credit money is money that arose on the basis of the development of credit relations pour cash and non-cash credit money.).
  - Banknotes
- Credit money:
  - Bills
  - Banknotes
Non-cash money - money that exists only in the form of records on settlement, current, savings and other accounts of individuals and legal entities. The computerization of the banking sector has led to the emergence of electronic money and credit cards.
- Credit plastic cards
- Payment plastic cards
- Electronic money is money in electronic bank accounts

Functions of money

Functions of money is the concentrated expression of roles in the economy.

Money has such a diverse set of properties that it becomes necessary to classify them, highlighting a number of functions. Each of the functions of money describes a more or less homogeneous range of economic transactions carried out with the help of this function. At the same time, it should be borne in mind that money is not the sum of functions, and while performing any one function, they retain their unity and contain all other functions.

The functions of money are in constant dynamics: some arose earlier, some later; individual functions have greatly changed their content and even lost their noticeable significance.

The emergence of money functions in the process of their evolution can be represented as follows:

I stage. . Historically the first function of money. As a measure of value, money is a unified measure of the value of all goods.
II stage. Money as a means of purchase. Money as a means of purchase is a medium of exchange.
III stage. .In the function of money as a means of payment, there is a time lag (discrepancy in time) between the sale of goods and the receipt of money for it. Under these conditions, conditions are objectively created for such an economic phenomenon as credit.
IV stage. Money as a means of distribution. In the distribution function of money, there is only their movement from their owner to the recipient. This function is an objective economic prerequisite for the emergence of public finance.
V stage. and savings. The process of savings and savings is a necessary element of the modern economy.
VI stage. . In the function of world money, money contributes to currency exchange, the creation of a balance of payments, the formation of an exchange rate.

As measures of value money was allocated from the world of goods to fulfill the role of a universal equivalent. As a measure of value, money acts as a universal measure of the value of all other commodities. Goods, services, production costs, individual and general needs, the volume of production at the level of enterprises and the entire national economy are expressed in money; wealth, income, debt - everything has a monetary value. Modern money has the property of commensuration not only in statics, but also in dynamics.

Purchasing medium is also one of the historically first functions of money. In this function, money serves the process of buying and selling. This function is called a medium of exchange, since money in this case serves the continuous process of circulation of goods, services, securities, etc. This function is associated with the process of buying and selling, that is, with the transformation of goods into money.

During the sale of goods, there may be a gap in time between the transfer of goods to the buyer and the receipt of money from him. The seller in this case grants the buyer a so-called deferred payment or credit. When the money does go to the seller, it performs the function means of payment. In this case, the money extinguishes the resulting debt, serves not only the loan, but also the payment of wages, as well as all other types of advance payments.

The distribution function of money, historically emerging after the emergence of such functions as a medium of circulation and a means of payment, consists in the fact that one independent economic entity transfers a certain amount of money to another without demanding any equivalent compensation in return. It is on this monetary function that the state budget, the distribution of profits of enterprises, the socio-economic systems of modern states are based.

In function savings and savings money is not used for circulation, but to create an independent form of wealth. The entire investment process, that is, economic growth, depends on this; development of the banking system, stock market, insurance, pension and other financial funds.

Money has always served not only, but also world economic relations. The role of the currency function of money is constantly increasing, especially in the context of the globalization of the world economy and finance. Collective currencies are created, for example, the euro.

After, they soon began to perform a number of different, but related functions. The variety and complexity of production relations, which are embodied in, determine the multiplicity of forms of manifestation of money itself. Each of these forms is called the function of money.

The function of money is a certain action or “work” of money to serve the movement of value in the process of social reproduction.

The question of the functions of money is one of the most controversial in the world. Disagreements concern not only the interpretation of individual functions of money, but also their quantity. Discussions are held both between representatives of different theoretical schools, and within each of them. Thus, most representatives of the Marxist theory of money recognize five of their functions, but they have different views on the essence of each of them. Even more noticeable are the differences in the interpretation of the functions of money among representatives of non-Marxist theories. Without generally denying the existence of the functions of money, most of them recognize only three functions and abstract from the rest. Thus, in the well-known book by the English economist L. Harris, The Monetary Theory, it speaks of the functions of a medium of exchange, a store of value, and a unit of account, and does not mention other functions at all. However, the classics economic theory and some of its representatives of the late 19th and early 20th centuries also recognized the five functions of money.

The functions of money are a concrete manifestation of their essence. In this regard, it is clear that the transformation economic nature modern money also determines the modification of their functions.

The functions of money are in constant dynamics: some arose earlier, some later; individual functions have greatly changed their content and even lost their noticeable significance.

The emergence of money functions in the process of their evolution can be represented as follows:

I stage. Money as a measure of value. Historically the first function of money. As a measure of value, money is a unified measure of the value of all goods.
II stage. Money as a means of purchase. Money as a means of purchase is a medium of exchange.
III stage. Money as a means of payment. In the function of money as a means of payment, there is a time lag (discrepancy in time) between the sale of a product and the receipt of money for it. Under these conditions, conditions are objectively created for such an economic phenomenon as credit.
IV stage. Money as a means of distribution. In the distributive function of money, there is only their movement from their owner to the recipient. This function is an objective economic prerequisite for the emergence of public finance.
V stage. Money as a means of accumulation and savings. The process of savings and savings is a necessary element of the modern economy.
VI stage. Money as a measure of the exchange of one currency for another. In the function of world money, money contributes to currency exchange, the creation of a balance of payments, the formation of an exchange rate.

At the moment, it is generally accepted to single out the following main functions of money:

is that money is the universal embodiment and measure of the value of a wide variety of goods. To determine the value of goods in money, it is necessary to take a certain amount of monetary material as a unit (to determine the scale of prices). The scale of prices is established by the state by law, while money performs the function of a measure of value objectively. The scale of prices does not depend on the change in the value of the monetary metal, since it is a fixed amount of the metal by weight.
is that money is an intermediary in the exchange of goods. This function is performed by real full and defective money.
closely related to the function of money as a medium of circulation. In the turnover mediated by money (sale for the sake of purchase), money acted as a fleeting intermediary and performed the function of a medium of exchange. When money carries out independent movement, passing from one owner to another, they perform the function of a means of payment (that is, they are used for payments without a direct exchange for goods (payment of taxes, utility bills, wages, etc.)).
. This function is performed by money when they leave the sphere of circulation (“fall out” of circulation) and are retained in the hands of certain persons. Money, acting in its gold and silver form (as real valuable money) forms a treasure. Let us note that along with the direct accumulation of treasures in monetary form, they are accumulated in the form of luxury goods made of gold and silver. This has the effect, on the one hand, of expanding the market for gold and silver, whatever their function, and, on the other hand, of creating a hidden source of money supply, which is particularly effective in periods of social upheaval.
consists in the fact that world money functions as a universal means of purchase (when paying for an international commodity transaction with money) as a common embodiment of social wealth (when wealth is transferred from one country to another). In addition, gold in the form of a treasure is at the same time a reserve fund of world money. Note that the real role in this function of national reserve currencies and other varieties of money is also growing.

All the above functions of money in their systemic unity constitute the real movement of money (the real functioning of the money supply). The content of this or that function of money reflects the features of the achieved level (stage) of the evolution of money itself.

Money is a means of payment for goods and services, a means of measurement, conservation (accumulation) of value. The role of money in the economy is great and diverse. Practically since ancient times evidence can be traced that money served three main functions.

Means of circulation. Money circulation is understood as the process of continuous movement of money in cash and non-cash forms, serving the processes of circulation of goods and services, the movement of capital. The circulation of banknotes implies their constant transition from one legal entity or individual to another. Money can be used to buy and sell goods and services. It is a convenient social invention that allows resource owners and producers to be paid with a "good" that can be used to purchase any of the entire set of goods and services available on the market. As a medium of exchange, money allows society to avoid the inconvenience of barter exchange.

A barter economy is an economy in which there is no single accepted medium of exchange and goods are exchanged directly for each other.

As economic development progresses, people stop directly exchanging one commodity for another. Instead, they sell goods for money and then use that money to buy the goods they desire.

At first glance, this procedure seems more complicated than barter, since one transaction is replaced by two. If you have apples and want nuts, wouldn't it be easier to exchange the first good for the second instead of selling apples for money and then using that money to buy nuts?

In fact, the opposite is true: two monetary transactions (transactions) are easier than one barter transaction. The use of money - any item that is generally accepted as a means of payment for goods, services and debts - greatly simplifies exchange. Then each person sells the goods directly to the buyer and buys directly from the seller.

For example, let's say you want to buy apples and sell nuts. But it would be a big surprise to have a person whose desires exactly complement your desires. It means that this person would be eager to sell nuts and buy apples. To use a classic economic expression, instead of a "double match of need", there will most likely be a "match need". Thus, if a hungry tailor fails to find an unclothed farmer who has both food and a desire for a pair of trousers, the barter system will fail. Both the seller and the buyer must want to purchase exactly what the opposite side has to offer. It turns out that each merchant has to be both a seller and a buyer at the same time.

Due to the need for a double coincidence of desires, such trading is much more costly, and sometimes even impossible, since people are forced to spend time and resources searching for other people whose needs and desires are exactly in line with their own. Another possibility of concluding a transaction in the conditions of barter trade is the situation when people buy goods that they themselves do not need, with the aim of using them later in exchange for the goods they really need.

A society in which trade has taken on a large scale cannot overcome the enormous obstacles of barter. Using the common medium of exchange, money, allows a farmer to buy trousers from a tailor who buys shoes from a shoemaker who buys leather from a farmer. Thus, the essential benefit of using a common medium of exchange is that it reduces the time it takes to exchange goods for goods and therefore saves resources that can be used either for the production of additional goods or for recreation.

This intermediary function is directly adjacent and intertwined with it is the function of money as a means of payment - paying taxes, obtaining and repaying a loan, paying salaries, benefits, paying utilities. At the same time, the movement of money is not accompanied by the simultaneous movement of goods.

Money, which functions well as a medium of exchange, should be readily accepted by everyone. Having a wide distribution, money provides its owner with a certain general purchasing power, which is a very important advantage. The use of money allows flexibility in the types and quantities of goods purchased, the choice of time and place of purchase, as well as the partners for the transaction. If a certain medium is used for a sufficiently long time, then its acceptability becomes stable. The acceptability of money depends on the willingness and willingness of the population to use it. Here are some examples of unacceptable money. In 1970, the US Treasury issued two-dollar notes (not issued since 1966) for two years. The population did not accept these banknotes for several reasons. One reason for the failure was that two-dollar bills were easily confused with one-dollar bills. People clearly prefer banknotes with a larger difference in denominations, 1 dollar, 5 dollars, rather than 1 dollar and 2 dollars. In addition, many, for some reason, believed that two-dollar bills bring misfortune. In 1979, the Treasury again tried to lower the cost of issuance by issuing a one-dollar coin. Significant savings were planned, since the shelf life of a coin is on average 15 years, while the shelf life of a paper bill is no more than 18 months. The Treasury also thought that people would be comfortable using one large coin rather than several small ones. The population also did not accept this coin. This happened for two reasons. First, this coin was similar in size to a quarter dollar coin. People, looking for change, confused these coins. Secondly, people always prefer paper money to coins.

Measure of value. Society considers it convenient to use the monetary unit as a scale for measuring the relative costs of heterogeneous goods and resources. This has advantages. Thanks to the monetary system, we do not have to express the price of each product in terms of all other products for which an exchange could be made; we cannot express the price, for example, of a car in terms of grain, or some other product. Money is used here as a common denominator, which means that it is enough to express the price of any product only in monetary units. This use of money allows parties to a transaction to easily compare the relative value of different goods and services.

The relative value of the goods is the proportion of the exchange of goods at which the manufacturer considers it profitable to sell the goods, and the buyer considers it profitable to buy the goods.

In primitive exchange, the relative value of a commodity was expressed in terms of the thing for which it could be exchanged. But as the range of goods produced by people expanded, money became a single measure of the value of all goods. The introduction of money facilitated and accelerated exchange, gave impetus to the economic progress of all mankind.

However, during a period of rapid inflation, money ceases to fulfill its function as a measure of value, but continues to serve as a medium of exchange. In conditions of hyperinflation, which existed, for example, in Israel in the 70s and in Bolivia in the 80s of the last century, a stable foreign currency, in particular the US dollar, against which the national currency was determined, usually served as a measure of value. While the national currency was depreciating more and more, the value of goods, expressed in dollars, remained almost unchanged. Entrepreneurs and merchants were usually guided by it.

But we all remember when in Russia at the end of 1991, on the threshold of economic reforms, the shortage of all goods became so acute that money ceased to be useful in this capacity and all trade went on the basis of barter.

Monetary goods (timber, steel, gasoline, meat, cars) were immediately revealed, for which everything that was needed could be exchanged. For example, here is how the table of the exchange of monetary goods for each other, compiled by the weekly Kommersant, looked like (Table 1.1).

Table 1.1. Proportions of exchange of goods for each other without the use of money

Barter goods Barter goods 1 2 3 4 5 6 7 8 1. GAZ-2410 car (for 1 piece) - 1.7 1940 820 460 120 35 515 2. KAMAZ car (for 1 piece) 0.6 - 1150 485 270 72 20 305 3. M-400 cement (per 1 ton) 0.0005 0.0009 - 0.4 0.2 0.06 0.02 0.3 4. Wood (per 1 cubic meter) 0.001 0.002 2 .5 - 0.6 0.15 0.04 0.6 5. Gasoline A-76 (for 1 ton) 0.002 0.004 4.2 1.8 - 0.26 1 ton) 0.008 0.014 16 6.8 3.8 - 0.28 4.2 7. Frozen meat (per 1 ton) 0.03 0.05 57 24.4 13.6 3.6 - 15.3 8. Red brick (for 1000 pieces) 0.002 0.003 3.3 1.7 0.9 0.24 0.07 -

For example, for 1 ton of gasoline, it was possible to "buy" 4.2 tons of cement, or 70 kg of meat, or 1,100 pcs. red brick.

Naturally, barter exchange is extremely complicated and inconvenient, and therefore humanity was looking for a universal money commodity that would suit all market participants.

Some modern authors tend to think that the function they call "money as a measure of value" should be called "money as a unit of account". The concept of value itself is debatable. A thing has value (this is the only correct translation of the English word used by classical economists value) and price. The word "value" is inherent in only one economic school that dominated Russia in the 20th century dictatorially. By and large, the world economic science is not interested in this concept at all. She is interested in the concepts of value and price. Money is the agreed unit of account for setting prices for goods and services. In order to get the most out of our family budget, we need to make calculations. This is not a calculation of what we will eventually buy, but a determination of opportunity costs. That is, this is not a determination that the item we have chosen costs, for example, 100 rubles, but the calculation that instead of this item we refused to buy the item. AND or so many things AT, means, calculations of opportunity costs - lost profits (prices of our choice).

Means of savings. Money is a very convenient form of storing wealth. Owning money, with rare exceptions, does not generate the cash income that you get from storing wealth in the form of real estate(private property) or securities (stocks, bonds, etc.), but money has the advantage that it can be spent immediately by a firm or household to meet any financial obligation. Money is the most liquid property.

Liquidity - ease of sale, sale, conversion of material or other assets into cash to cover current financial obligations, the ability of assets to turn into money quickly and easily, while maintaining a fixed nominal value. The degree of liquidity depends on the ease and cost with which any property can be turned into cash by the owner.

“If one person has a basket of apples, and another has money, then the owner of the apples will be forced to sell them in a short time so as not to lose his goods. And the owner of the money can wait until the price comes in line with his ideas. His money does not require "warehouse expenses", but, on the contrary, provides a "liquidity benefit", i.e. having money in your pocket or on a bank account, you can expect when the right moment comes or the price drops to such a level when it is profitable to buy the goods.

Inflation is an overflow of the circulation channels of the money supply in excess of the needs of trade, which causes the depreciation of the monetary unit and an increase in prices. Inflation is characterized by a constant upward trend in the dynamics of the average price level.

Hyperinflation - inflation with particularly high rates of growth in the general level of prices (usually more than 50% per month), which has a devastating effect on the country's economy and leads to the rapid impoverishment of the people and an increase in unemployment.

With rare exceptions, these were situations where the state issued so many paper notes that the value of each monetary unit almost dissolved. The famous history of hyperinflation in Germany after World War I is a case in point. In December 1919, about 50 billion marks were in circulation. Four years later, this figure has grown to 496,585,345,900 billion! As a result, the value of the German mark was an infinitesimal fraction of its value in 1919, and the blame for this lay largely on the country's Central Bank.

“The German Weimar Republic is the clearest example of how a weak government held out for some time with finances upset by inflation. On April 27, 1921, the German government was presented with a staggering invoice for reparation payments to the Allies for 132 billion gold marks. This amount far exceeded what the Weimar Republic could collect from taxpayers. With a huge budget deficit, the Weimar government set up the printing press to pay its bills. In 1922 the price level in Germany rose by 5470%. In 1923 the situation worsened; the price level increased by 1,300,000,00,000 times… Prices rose so fast that the waiters changed them several times on the menu during breakfast. Sometimes restaurant patrons paid twice the price for the meal they ate as the price listed on the menu when they first ordered.”

However, even after emission was taken under strict control in many countries, inflation did not disappear. And then economists took up a deeper study of the causes of inflation.

Inflation is caused by monetary and non-monetary factors, which include: the issue of cash; state budget deficit; capital flight abroad; dollarization of the economy; non-payments in the economy; artificial shortage of money in the country; the use of money surrogates; low exchange rate of the ruble; monopoly in the economy; growth in production costs due to rising prices for raw materials and energy carriers, wages, etc.; imbalances in the economy; inflation expectations; shadow economy; imperfection of tax policy.

Distinguish between inflation of demand and inflation of supply (costs).

Demand-pull inflation occurs due to the fact that society's costs exceed its production capabilities, ceteris paribus, an increase in the money supply leads to an increase in aggregate demand. Once full employment is reached and total output becomes constant, this additional aggregate demand can only drive up prices. Economists describe this situation as: “Too much money hunting for too few goods.”

Cost inflation, when prices rise due to rising production costs, but then the increased prices lead to a new increase in the cost of buying all the necessary inputs of production, which means that manufacturers have to raise prices again, and then the price increase becomes self-sustaining. The reason may be the growth of wages, outpacing the growth of labor productivity, or the rise in the cost of energy, outpacing the pace of implementation of energy-saving production technologies.

Thus, inflation destroys the most important mechanism of the economy, necessary for normal development - the mechanism of accumulation of money and their investment in the development of production. The reason is that when inflation is unprofitable to save and lend. Therefore, it is not for nothing that they say that in times of inflation one must live in debt: one always manages to repay less than he took, and earning the money necessary to repay the debt is easier, because it grows wage. Money becomes "hot" money. The rapid depreciation of the value of the monetary unit can lead to the fact that it ceases to function as a medium of exchange. Firms and households may refuse to accept paper money in exchange because they do not want to suffer the depreciation that will occur over the period of holding them. The economy will return to an inefficient barter exchange. It is the same with savings - people are ready to use money as a store of value as long as there is no decrease in the value of accumulated money as a result of inflation. And the economy is able to effectively use the monetary unit as a measure of value in the case of relative stability of its purchasing power.

Summing up the initial analysis of monetary functions, one should note their interaction, and also take into account that the function of the medium of circulation and payment should determine the size of the total money supply in the country, and the function of accumulation is directly related to the monetary policy of the state.

The functions of money are the main tasks performed by money:

1. Means of circulation of goods and services.

Each seller (be it a seller of goods, a producer of raw materials, a worker - a seller of labor) receives money and has the right to buy with it whatever he pleases. In other words, by acting as a medium of exchange, money gets rid of the old, inconvenient and less reliable procedure of barter.

2. A means of measuring the value of goods (a measure of value).

When interacting, people could evaluate the results of their activities (which they exchange) in some other evaluation. Money serves as a universal measure of value, the scale on which the vast majority of calculations are based.

Money as a universal equivalent measures the value of all goods. The form of manifestation of value is the price of goods.

3. Means of accumulation (saving money for future market assets).

Relative cheapness, ease of storage and liquidity make money a means of accumulating wealth. Since money is the most liquid property, it is a very convenient form of wealth storage. Possession of money, with rare exceptions, does not generate monetary income, which is derived from the storage of wealth, for example, in the form of real estate. However, money has the advantage that it can be used immediately to meet any financial obligation.

4. Means of payment.

In this function, money is used in: selling goods on credit; payment of salaries to employees. When money functions as a medium of circulation, there is a counter movement of money and goods, and when they are used as a means of payment, there is a gap in this movement.

5. The function of world money.

In 1867, the Paris Agreement recognized gold as the only form of world money. In 1970, the IMF introduced the first international currency, the SDR (Special Drawing Rights). It is determined on the basis of the weighted average exchange rate of 5 countries: USA, Japan, Great Britain, Germany, France.

In 1979, a new international monetary unit ECU was introduced. Determined based on the weighted average exchange rate of 11 European countries. Since 01/01/2000, it has been replaced by the euro.

World money has a threefold meaning and serves:

a) a universal means of payment (for settlements on international balances);

b) universal purchasing power (when buying goods abroad);

c) the materialization of social wealth (transfer from one country to another by means of loans, interest).

All five functions of money represent a manifestation of a single entity as the universal equivalent of goods and services; they are in close connection and unity. Logically and historically, each subsequent function presupposes a certain development of the previous functions.