Jaquelyn P.

Macanlalay BSBM 2 - Irregular

Money
Money is any object or record that is generally accepted as payment for services and repayment of debts in a given socio-economic context or country. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment. Any kind of object or secure verifiable record that fulfills these functions can serve as money. Money is historically an emergent market phenomenon establishing a commodity money, but nearly all contemporary money systems are based on fiat money. Fiat money is without intrinsic use value as a physical commodity, and derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for "all debts, public and private". The money supply of a country consists of currency (banknotes and coins) and bank money(the balance held in checking accounts and savings accounts). Bank money usually forms by far the largest part of the money supply.

Nature of Money
Loving money with awareness knows that money is a form of energy that represents well being and abundance. Well being and abundance is rightfully belonging to all nature and creation, and you can have as much of it as you want. As long as every part of nature works in harmony with each other, everything is sustained and multiplied. Energy is neither created nor destroyed but changes from one form to another. All energy comes from the sun which keeps changing form through nature. Sunlight is converted into starch and sugar by plants, which feed the animals, which help spread its seeds, which grows more plants, which feeds more animals, which feed humans, which build man made constructions, which facilitate the work of society, which transforms civilization, which leads to inventions and discoveries, which promotes better commerce and diplomacy, which results in the entire earth cultivated and transformed by humans, which leads to the evolution of human consciousness. Money came into being sometime in civilization as a medium of energy exchange. At first material things were exchanged directly by one party with another. But money enabled a person to give what he has to someone who does not have the exact thing that he wants in exchange for money, so that he can use it to obtain the exact thing that he wants from another person who has it. Money is an idea that increased the ease, freedom and speed of energy exchange in this world which led to faster progress.

Creation of Money
Our money was once valued by the worth of goods, but today it is our goods that are valued by their worth in money. Banks create money out of thin air by loaning it into existence. Increasing the money in the market creates inflation. This also means the system is required to continually grow in order to offset this inflation. Money is not a real object, its value is abstract, and controlling large sums of it is imaginary wealth. We have given the power over our currency to private companies they are greedy black holes, constantly starved for more. The good news for them is they can create more money. The bad news for us is that they can create more money. Money is a tool, to be used in exchange for goods and services. The value of our currency is a conceptualized ideal that we all agree upon. For example, lets say you can buy a watermelon for a dollar. The seller bases the value of his watermelon at a dollar on the assumption that another person will value dollars in a similar way. He can then buy some grain for the equivalent value with the dollar instead of trading his watermelon directly for grain. Money only has value if everyone can use it. Thus, currency acts as a medium to exchange goods and services instead of direct barter. Its value is agreed upon by a consensus in the community. As Herman Daly and Joshua Farley describe it, the value of a dollar, then, is the virtual wealth of the community divided by however many dollars are in circulation. (Ecological Economics) Think about that as we talk about inflation

Financial Intermediaries
Financial intermediaries are units which incur liabilities on their own account on financial markets by borrowing funds which they lend on different terms and conditions to other institutional units. For the purposes of balance of payments data, financial intermediaries are defined as being: (i) other depository institutions (banks, other than the central bank); (ii) other financial intermediaries, except insurance companies and pension funds; and (iii) financial auxiliaries.

What is Finance?
"Finance" is a broad term that describes two related activities: the study of how money is managed and the actual process of acquiring needed funds. Because individuals, businesses and government entities all need funding to operate, the field is often separated into three subcategories: personal finance, corporate finance and public finance. All three categories are concerned with activities such as pursuing sound investments, obtaining low-cost credit, allocating funds for liabilities, and banking. Yet each has its own specific considerations. For example, individuals need to provision for retirement expenses, which means investing enough money during their working years and ensuring that their asset allocation fits their long-term plans. A large company, on the other hand, may have to decide whether to raise additional funds through a bond issue or stock offering. Investment banks may advise the firm on such considerations and help them market the securities. As for public finance, in addition to managing money for its day-to-day operations, a government body also has larger social responsibilities. Its goals include attaining an equitable distribution of income for its citizens and enacting policies that lead to a stable economy.

Why do we study Finance?

We need to study finance because in our courses this is one of the requirements. In Finance, I can say that they will basically taught us on how to estimate the value of assets (including machinery, businesses, real estate, options, or whatever else you might want to buy), and how the modern international financial system works. That means we spent most of our time learning and practicing valuation calculations of various types, or reading case studies or articles about financial regulations and financial markets. And also we learned about the CAPM and the basics of portfolio theory. We learned about what options are and how to value them. We learned how investment banks make money and some of the terms used in the field.