Make Money Online

53 Ways To Make Money Online!

If you are looking for different ways to make money online, you are in the right place. In this post you will find some of the top ways to make money online, along with some of the most unusual ways people use to make money online. Making money online isn’t always easy. It takes hard work and consistency. But if you are willing to put enough time and effort into it, there are number of ways you can use the internet to make money. Here are 53 unusual and best ways to make money online.

Note:
Wherever possible, I tried to provide you some other resources and information about some of these methods by linking to other articles that are more in dept and detailed, which will give you more information on how to start making money with that method. I hope it will be helpful.
Make Money Trading Forex
Forex or Foreign Exchange is basically a forums of trading where you buy and sell foreign currencies. It’s a very profitable business which is very risky. Make sure you spend enough time to learn how Forex works, before you get into it. A good place to start is the biggest Forex trading website Forex.com which gives you $50,000 practice money, so you can start trading and learning without risking your own money.  Forex Trading For Beginners
Selling Photographs
If you like photography and/or can take interesting pictures, there are many sites you can upload your images too, and get paid every time someone buys it. The good thing is that a photo can sell over and over again. Imagine the potential if you have 100 or so photographs. Make money selling stock images.     12 websites to sell your images on
Sell unused items on Ebay
I know your getting tired of hearing about ebay, but the truth of the matter is that you can make money on ebay in many different ways. You, like most other people may have stuff laying around the house, in the garage or wherever, find them and sell them on ebay. Many times you can find valuable stuff in garage sales and second hand for very cheap, turn around and sell them on ebay for a profit.
Sell other peoples stuff on Ebay
There are many people who don’t know how to sell on ebay. You can sell their stuff on ebay in exchange for a commission.   Ebay for beginners
Designing Logos and Ads
Hundreds of new websites and blogs are born everyday, but most of the blog/site owners don’t know how to make a logo or an ad. Use free classified sites and related forums to provide your service for a flat rate.
Website and Domain Flipping
Buy good domains and resell for a profit. Build a website or a blog, work on it for a while and get it going. Just like flipping houses. When  you get the site to a good point, put it up for sale. People like websites that are ready to go, and they do pay good money for it. Hundreds of website are bought and sold every day on sites like Flippa.com

Get paid to take online surveys
Paid surveys are a great way to make extra money. Although you have to be careful and watch out for scammers, there are hundreds of legitimate paid survey companies out there, that you can register with for free, and make money taking online surveys.
40+ Legitimate Paid Survey Sites
Designing Websites
If you are good at building websites, why not make money doing so. Use forums like site points and digital points to offer your service to webmasters.
Design T-Shirts and Other Customizable Items
Good with coming up with a cool catch word or a cool design? You can make a decent amount of money designing and selling T-shirts on sites like Café Press.  9 Website To Design & Sell  Merchandise Online
Make Digital Scrap Booking Templates
I personally don’t get this, but many People love to scrapbook, and they do pay good money for templates. Make different kinds of templates, and make it easy for people to use them.
Record Songs and Sell Online
Don’t laugh at this one! If you can sing, there is no more worries for finding a record label company who will help you get there. Thanks to the internet and all the video sharing sites, you can easily find your way up, if you are talented an have the voice for it.
Make MySpace Backgrounds
They are all over the internet, those ad for myspace background! That means there is a market for it, if those advertisers are willing to spend money advertising them for this long. Creating MySpace backgrounds isn’t that hard. But many people don’t want to do it, or don’t have the time to do it. You can provide them with this service and customize their MySpace pages, and charge a fee for doing so. And what place better to advertise your service than MySpace itelf?…
Create videos
With the huge interest in videos online, there is always room for more. Create interesting videos of yourself or whatever, and upload them to Web Sites like Revver and Break. They will share a percentage of their ad revenue with you. Plus you get something for each download as well.
Get Paid to Surf
Get paid to surf is kind of big on the internet. And of course there are scammers following it as well. So, be careful and make sure you register with known and trusted sites.  Get paid to surf
Get Paid To Or GPT programs
There are many sites online known as GPT (Get Paid To…), which you can sign up with for free. You earn money or points for doing things you do online. Like registering with freebies sites, shopping and things like that. They are sort of middle man. They get paid from advertisers to drive leads to them, and when you go through their website, the share a percentage of that money with you.  8 Legitimate GPT Sites

Directory Submission
In order for a website or blog to be successful and make money, it needs traffic. There are many ways to work on traffic. One way is to submit your site to website directories. But, many webmaster and blogger are busy with other aspects of running a site, so they don’t have time to do this. That’s where you can come in, and offer to submit their site to directories for a fee. Again use forums like site points and digital point to offer your service.
Making money Affiliate Marketing
This is by far the best way to make money online, at least in my opinion. You are basically selling other peoples stuff for a commission. You can find digital products like e-books and short reports to promote on sites like clickbank and paydotcom.   Affiliate Marketing for beginners
Get Paid To Review
Set up a website or a blog, and start a review site. Website owners and bloggers will pay you to post a review of their site on your site. It helps them get the word out and helps you make money.
Niche Directory
You have seen those directory sites that have a list of specific sites in different categories. Set up one for yourself. Gather a list of site and sources related to a specific niche, and list them on your site. Sell ad space to other webmasters. You can charge a monthly fee to have their ad shown on your site. byuandsellads is a good place to look for potential costumers.
Get Paid to Search
Search engines are big money makers. No wonder every day new search engines pup up everywhere. But since they are not as big as Google and yahoo and some other engines, they pay you to use ther site to search. Basically their sharing their earnings from their advertisers with you. 6 Search Engines that pay you to search
Make Photo Mosaics
If you can make photo mosaics, set up a website and offer your Photo Mosaics service. You will be surprised how many people pay for these things.
Become a Virtual Assistant
Its becoming very popular, as more and more online based businesses are born every day. People use virtual assistant for research, finding things, doing time consuming tasks, making phone calls and etc. Setup a free blog or site to offer your service.
Forum Hosting
Use software like SebFlipper you to host hundreds of separate forums from a single web server. Make money by charging people to host a forum with you, or offer it for free, but show your ads on their forums and make money that way.
Get Paid To Install Applications
Most People have problem with installing different kinds of applications. If you are good at installing a particular app or a software, why not make some money while helping others?
Get Paid To Answer Questions
If you have knowledge about something (which you do, everybody knows about something that others may not know), put it to work for you. There are many websites that you can offer your expertise and knowledge in exchange for money.   11 Site To Give Advice & Answers For Money.  11 Website that pay you for Giving Advice And Answering Questions
Pod casting
Think of it as a voice or video blogging. Talk about interesting topic and make money from ads shown. If you are a good speaker, and have a nice voice, its not that hard to get hundreds of subscribers.
Get Paid To Participate In Focus Groups
Focus group are basically the same as paid surveys, but unlike paid surveys, most focus groups are conducted in a physical location. Focus group studies are held in most major cities. You will be in with a group of other selected people, talking and answering question about whatever product or service the study is about. You can expect to get paid from $60 to $250 for an hour to a full day of study.   10 Legitimate Paid Focus Groups
Domain Drop shipping!
Its basically selling domain registration for big domain registration sites like TuCows, which makes it easy for you to start your own private label domain registration and make money not only from the initial sale, but from renewals as well.
Create and Sell E-Books
You can make e-books about anything. If you have some knowledge about anything, whether its a recipe or a how to do this and that. Its not as hard as you think. Look at some e-books that are selling for $50-$100 or whatever, and you see what i mean (most of them are crap, but people do pay for them!).    How to create an ebook for free(6 steps)
Make money with Amazon Mechanical Turk
Its one of the biggest unknown ways of making money online, yet its so easy to do. You do simple tasks like differentiating pictures from text, and get paid for it. If you have enough time to invest in it, you can make good money with amazon turk.           Make Money With Amazon Turk
Software Review
WebSites like SoftwareJudge will pay you for using and reviewing any of the software available in their collection.
Make Money Blogging
Blogging is becoming more and more popular. You can set up a blog in less than an hour. There are many free blogging platforms you can use at first. When you get comfortable, then pay for your own hosting and domain name. You can blog about anything you like, no matter how bizarre and unusual it is, there will be an audience for it, believe it or not. You can make money by showing ads on your blog using advertising programs like Google adsense.
Moderate A Forum
Forums are another great way to make some extra money. You probably already participate in a forum or two, so why not start your own? Make money by showing ads. plus if the forum gets good and popular, you can charge people to join, or have a special room in the forum where one has to subscribe in order to participate. An example of that would be the WarRoom which only paid users of worrier forum have access to.
Get Paid For Data Entry
Not the scam one, we are talking about data entry for Google. Google pays people to take photos of businesses, and enter basic data such as hours of operation. You know how many business are located just next to your favorite grocery store? MyDataTeam
Write And Sell Software
Know how to make a software? Then start writing software and plug-ins. One of the hottest plug-in markets is the blogging platforms like word press and blogger. Use forums to find out what bloggers need that you can make a plug-in for. Create your plug-in or software, and set up a free blog to advertise it.
Get Paid as a freelancer
There are tons of places online you can offer your writings. There are even ome websites that pay you for writing exclusive content for them.         18 Websites that pay you for writing
Make Money Posting On Forums
People who start a new forums often pay people to post on their forums, so it will look active, therefore attracts more people to join the discussion. Many forums will pay up to $0.25 per post, which can be just a sentence or two. Again you can use established forums to find people who are looking for forum posters.
Ads On Forums
If you like participating in forums or are already a member of any forum, look for “ad share” sign in your user CP. Some forums offer a percentage of their earnings from ads, with their members.
Translate Document
If you speak a second language, why not translate document online and offline, and get paid for it? Free classified sites are the best way to advertiser your service.
Become a Life coach or an Adviser
You don’t even have to set up your own company if you don’t want to, there are already many sites that pay you to advise and couch others over the phone or by chat. You can use your expertise on many different subjects to make money as a coach.
Get paid to play games (game money)
On game sites like Farm Gold and Second Life, you can make virtual money, which can be exchanged for real money. I am sure you have heard of like Ansche Chung, which is the first person who become a millionaire, exchanging her virtual money earned from Second Life for real money, worth over a million dollar.   10 websites to get paid to play games
Become Game Tester
Very easy way to make money by doing something enjoyable. But its hard to find though, but if you look around, you may find a company or two. If I do find one, I will update this page and post it here. So be sure to bookmark this page and check back.
Your own Search Engine
Use Google to build your own custom search engine. Build a search engine for a specific topic like a search engine just for finding information related to music or what have you. To get it going, set up contests for searchers, and give a prize to the biggest searcher. You make your money when people search from your search engine and click on ads.
Get paid to comment on blogs
In order to rank higher and attract more traffic to make money, bloggers need quality links pointing back to their blog from other blogs, more than anything else. You can do that for them by commenting on other peoples blog and charging $0.50 or so for each link back.
Become a Job Referrer
Some firms pay referral bonuses of up to $1,000 for referring the right person for a job. Develop relationships with recruiters, like temporary job finding services and refer people who you know are fit for the specific job. You can do this both online and offline.
Software Plus
Work on already developed softwares and make programs that will make the software better and easier to work with.
Convert Online Money
You can make money by converting, EGold money into Paypal money, etc. people charge up to 5%-10% to do the same thing.
Drop Shipping
Use sites like Café Press to create a free storefront online and be a drop shipper. You don’t have to deal with anything but getting customer to visit your online store front.
Sell Craft and Art Work online
Have free time on your hand and are good at making things? Well, use your skills to create art work and crafts to sell online. You can sell your art work and crafts either on ebay or classified sites, specially craigslist.
Get paid to Shop as a mystery shopper
Mystery shopping is becoming a popular method for companies to evaluate there employees and customer services skills. Although there are a lot of different opinions about this, mystery shopping is actually growing as an industry. You will be assigned to shop and dine in different places and report your experience back. Depending on specific assignments, you can expect to get paid anywhere from $40 to $300 or more per assignment. Of course the amount that you spend buying goods and services, will be reimbursed. Sometimes you get to keep the item you bought at no charge to you.                    10 Legitimate Mystery Shopping Companies
Make money with CPA
CPA is a much easier version of affiliate marketing, which most of the time you don’t have to sell anything, you just have to send leads to advertisers site. For example, some Advertiser will pay you up to $2 each time you send a lead to there page where the person enters an email address or a zip code in order to participate in a survey to win something. The good thing about CPA is that although to get accepted by CPA networks you have to have a website or a blog, you don’t need a website or blog to make money. Depending on each advertisers terms, you can even use free classified sites to advertise your special link which send people to advertisers page where they can enter information, so you get paid.   CPA for beginners
Get paid for sharing files
There are a couple of document sharing sites that you can upload any kind of file you own to, and every time someone downloads it, you get paid for it. The files can be in almost any format, from txt to pdf and everything else. 5 Website To Get Paid For Sharing Your Files

Get paid to Socialize
Now that Social networking sites are becoming more and more popular, a lot of people want to get in the game and make money running their own social networking site. But again since they need some members to get the word out and make the site look active, so they are willing to pay people to become a member and post messages. Here are some social networking site you can get paid . 5 Social Networking Sites that pay you
There you have it, 53 ways you can make some extra cash online. I hope this list can give you some ideas and inspirations to make some extra cash, specially in this hard times. I will be happy to add more ways to this list, so Please feel free to let me know If you know of any other ways to make money online.

Your Financial Life Plan: An Overview

EDITOR'S NOTE: As Americans continue the uphill climb to economic recovery, deciding where to invest is only part of the battle. In our special report, "Build Your Financial Life Plan," we offer a complete strategy for all aspects of your financial well-being. We've also developed an interactive tool to help you create your own plan. To get your customized strategy, go to www.smartmoney.com/lifeplan.

In architecture, there's a big difference between a sketch and a plan. A sketch sets out the broad aspirations for your project -- it's a picture of what your dream house will look like when it's finished. A plan, on the other hand, lays out the structural details that will bring that house into existence, down to every last window, rain gutter and light socket. And over the past couple of years, many Americans learned the hard way that when it came to getting their financial houses in order, what they thought was a plan was much more like a sketch. Today, with unemployment stubbornly high and the stock and housing markets wobbly, these folks are finding that the devil is in the details you ignore.
But there's growing evidence that, as the economy slowly recovers, consumers are getting serious about drawing up a financial life plan -- not just a new approach to investing, but a strategy that covers it all, from health care to taking care of the family legacy.
That shift is making itself felt in the financial-services industry. In the three-year period ending at the close of 2009, independent advisers attracted more investor assets than big Wall Street brokerages for the first time ever, according to the consultancy Tiburon Strategic Advisers; indeed, despite lingering uncertainty in the markets, more than 60 percent of advisers reported actually gaining clients in the past year. Bing Waldert, a director at research firm Cerulli Associates, says at those firms "you're more likely to see a comprehensive financial planner" who can offer broad-ranging advice about taxes, insurance and other details beyond the investment portfolio. At the same time, big mutual fund companies are recasting themselves as big-umbrella advisers, including Charles Schwab, which just finished a huge expansion of its "money-management education" Web site, and T. Rowe Price, which has unveiled a slick new tax-planning center.
It's all part of a recognition, by clients and companies alike, that well-being stretches far beyond a person's portfolio. "If we don't talk about much more than just investing decisions, plans can easily get derailed," says Elaine King, a wealth manager at the Coral Gables, Fla., wealth-management firm Gibraltar Private.
To be sure, many people have good reason to seek the extra help, as they face not only lower expectations for the stock and housing markets but also bigger expenses over the horizon.
Almost all the tax cuts passed in the first part of this decade are due to expire this year, and in an era of massive deficits, most are unlikely to be renewed -- while other, new levies could stick taxpayers with an even bigger bill. With profits expected to stay modest, many onlookers expect companies to be increasingly stingy with employee benefits, whether it's raises and bonuses or 401(k) matches and health plans. Still, the pros we've tracked down say a detailed life plan that includes the right financial steps can overcome the challenges of a postcrash economy. Here are some places to get started.

Read more: Your Financial Life Plan: An Overview - Personal Finance - Retirement - SmartMoney.com http://www.smartmoney.com/personal-finance/retirement/your-financial-lifeplan-an-overview/#ixzz16Vj2aLu3

Money

 

For other uses, see Money (disambiguation).

Coins and banknotes – the two most common physical forms of money.

Money is any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.^[1][2] The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred payment.^[3][4]
Money originated as commodity money, but nearly all contemporary money systems are based on fiat money.^[3] 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 demand deposits or 'bank money' (the balance held in checking accounts and savings accounts). These demand deposits usually account for a much larger part of the money supply than currency.^[5][6] Bank money is intangible and exists only in the form of various bank records. Despite being intangible, bank money still performs the basic functions of money, being generally accepted as a form of payment.^[7]

Contents [hide] 1 History 1.1 Etymology 2 Functions 2.1 Medium of exchange 2.2 Unit of account 2.3 Store of value 2.4 Standard of deferred payment 3 Money supply 3.1 Market liquidity 3.2 Measures of money 4 Types of money 4.1 Commodity money 4.2 Representative money 4.3 Fiat money 4.4 Commercial bank money 5 Monetary policy 6 See also 7 References

History

A 640 BC one-third stater electrum coin from Lydia.

Main article: History of money

The use of barter-like methods may date back to at least 100,000 years ago, though there is no evidence of a society or economy that relied primarily on barter.^[8] Instead, non-monetary societies operated largely along the principles of gift economics. When barter did occur, it was usually between either complete strangers or potential enemies.^[9]
Many cultures around the world eventually developed the use of commodity money. The shekel was originally a unit of weight, and referred to a specific weight of barley, which was used as currency.^[10]. The first usage of the term came from Mesopotamia circa 3000 BC. Societies in the Americas, Asia, Africa and Australia used shell money – often, the shells of the money cowry (Cypraea moneta L. or C. annulus L.). According to Herodotus, the Lydians were the first people to introduce the use of gold and silver coins.^[11] It is thought by modern scholars that these first stamped coins were minted around 650–600 BC.^[12]
The system of commodity money eventually evolved into a system of representative money.^{[citation needed]} This occurred because gold and silver merchants or banks would issue receipts to their depositors – redeemable for the commodity money deposited. Eventually, these receipts became generally accepted as a means of payment and were used as money. Paper money or banknotes were first used in China during the Song Dynasty. These banknotes, known as "jiaozi" evolved from promissory notes that had been used since the 7th century. However, they did not displace commodity money, and were used alongside coins. Banknotes were first issued in Europe by Stockholms Banco in 1661, and were again also used alongside coins. The gold standard, a monetary system where the medium of exchange are paper notes that are convertible into pre-set, fixed quantities of gold, replaced the use of gold coins as currency in the 17th-19th centuries in Europe. These gold standard notes were made legal tender, and redemption into gold coins was discouraged. By the beginning of the 20th century almost all countries had adopted the gold standard, backing their legal tender notes with fixed amounts of gold.
After World War II, at the Bretton Woods Conference, most countries adopted fiat currencies that were fixed to the US dollar. The US dollar was in turn fixed to gold. In 1971 the US government suspended the convertibility of the US dollar to gold. After this many countries de-pegged their currencies from the US dollar, and most of the world's currencies became unbacked by anything except the governments' fiat of legal tender and the ability to convert the money into goods via payment.

Etymology

The word "money" is believed to originate from a temple of Hera, located on Capitoline, one of Rome's seven hills. In the ancient world Hera was often associated with money. The temple of Juno Moneta at Rome was the place where the mint of Ancient Rome was located.^[13] The name "Juno" may derive from the Etruscan goddess Uni (which means "the one", "unique", "unit", "union", "united") and "Moneta" either from the Latin word "monere" (remind, warn, or instruct) or the Greek word "moneres" (alone, unique).
In the Western world, a prevalent term for coin-money has been specie, stemming from Latin in specie, meaning 'in kind'.^[14]

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In the past, money was generally considered to have the following four main functions, which are summed up in a rhyme found in older economics textbooks: "Money is a matter of functions four, a medium, a measure, a standard, a store." That is, money functions as a medium of exchange, a unit of account, a standard of deferred payment, and a store of value.^[4] However, most modern textbooks now list only three functions, that of medium of exchange, unit of account, and store of value, not considering a standard of deferred payment as a distinguished function, but rather subsuming it in the others.^[3][15][16]
There have been many historical disputes regarding the combination of money's functions, some arguing that they need more separation and that a single unit is insufficient to deal with them all. One of these arguments is that the role of money as a medium of exchange is in conflict with its role as a store of value: its role as a store of value requires holding it without spending, whereas its role as a medium of exchange requires it to circulate.^[4] Others argue that storing of value is just deferral of the exchange, but does not diminish the fact that money is a medium of exchange that can be transported both across space and time.^[17] The term 'financial capital' is a more general and inclusive term for all liquid instruments, whether or not they are a uniformly recognized tender.

Medium of exchange

Main article: Medium of exchange

When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. It thereby avoids the inefficiencies of a barter system, such as the 'double coincidence of wants' problem.

Unit of account

Main article: Unit of account

A unit of account is a standard numerical unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of relative worth and deferred payment, a unit of account is a necessary prerequisite for the formulation of commercial agreements that involve debt. To function as a 'unit of account', whatever is being used as money must be:

• Divisible into smaller units without loss of value; precious metals can be coined from bars, or melted down into bars again.
• Fungible: that is, one unit or piece must be perceived as equivalent to any other, which is why diamonds, works of art or real estate are not suitable as money.
• A specific weight, or measure, or size to be verifiably countable. For instance, coins are often milled with a reeded edge, so that any removal of material from the coin (lowering its commodity value) will be easy to detect.

Store of value

Main article: Store of value

To act as a store of value, a money must be able to be reliably saved, stored, and retrieved – and be predictably usable as a medium of exchange when it is retrieved. The value of the money must also remain stable over time. Some have argued that inflation, by reducing the value of money, diminishes the ability of the money to function as a store of value.^[3]

Standard of deferred payment

Main article: Standard of deferred payment

While standard of deferred payment is distinguished by some texts,^[4] particularly older ones, other texts subsume this under other functions.^[3][15][16] A "standard of deferred payment" is an accepted way to settle a debt – a unit in which debts are denominated, and the status of money as legal tender, in those jurisdictions which have this concept, states that it may function for the discharge of debts. When debts are denominated in money, the real value of debts may change due to inflation and deflation, and for sovereign and international debts via debasement and devaluation.

Money supply

Main article: Money supply

In economics, money is a broad term that refers to any financial instrument that can fulfill the functions of money (detailed above). These financial instruments together are collectively referred to as the money supply of an economy. Since the money supply consists of various financial instruments (usually currency, demand deposits and various other types of deposits), the amount of money in an economy is measured by adding together these financial instruments creating a monetary aggregate. Modern monetary theory distinguishes among different types of monetary aggregates, using a categorization system that focuses on the liquidity of the financial instrument used as money.

Market liquidity

Main article: Market liquidity

Market liquidity describes how easily an item can be traded for another item, or into the common currency within an economy. Money is the most liquid asset because it is universally recognised and accepted as the common currency. In this way, money gives consumers the freedom to trade goods and services easily without having to barter.
Liquid financial instruments are easily tradable and have low transaction costs. There should be no (or minimal) spread between the prices to buy and sell the instrument being used as money.

Measures of money

The money supply is the amount of financial instruments within a specific economy available for purchasing goods or services. The money supply is usually measured as three escalating categories M1, M2 and M3. The categories grow in size with M1 being currency (coins and bills) and checking account deposits. M2 is currency, checking account deposits and savings account deposits, and M3 is M2 plus time deposits. M1 includes only the most liquid financial instruments, and M3 relatively illiquid instruments.
Another measure of money, M0, is also used, although unlike the other measures, it does not represent actual purchasing power by firms and households in the economy. M0 is base money, or the amount of money actually issued by the central bank of a country. It is measured as currency plus deposits of banks and other institutions at the central bank. M0 is also the only money that can satisfy the reserve requirements of commercial banks.

Types of money

Currently, most modern monetary systems are based on fiat money. However, for most of history, almost all money was commodity money, such as gold and silver coins. As economies developed, commodity money was eventually replaced by representative money, such as the gold standard, as traders found the physical transportation of gold and silver burdensome. Fiat currencies gradually took over in the last hundred years, especially since the breakup of the Bretton Woods system in the early 1970s.

Commodity money

Main article: Commodity money

Many items have been used as commodity money such as naturally scarce precious metals, conch shells, barley, beads etc., as well as many other things that are thought of as having value. Commodity money value comes from the commodity out of which it is made. The commodity itself constitutes the money, and the money is the commodity.^[18] Examples of commodities that have been used as mediums of exchange include gold, silver, copper, rice, salt, peppercorns, large stones, decorated belts, shells, alcohol, cigarettes, cannabis, candy, etc. These items were sometimes used in a metric of perceived value in conjunction to one another, in various commodity valuation or Price System economies. Use of commodity money is similar to barter, but a commodity money provides a simple and automatic unit of account for the commodity which is being used as money. Although some gold coins such as the Krugerrand are considered legal tender, there is no record of their face value on either side of the coin. The rationale for this is that emphasis is laid on their direct link to the prevailing value of their fine gold content.^[19] American Eagles are imprinted with their gold content and legal tender face value.^[20]

Representative money

Main article: Representative money

In 1875 economist William Stanley Jevons described what he called "representative money," i.e., money that consists of token coins, or other physical tokens such as certificates, that can be reliably exchanged for a fixed quantity of a commodity such as gold or silver. The value of representative money stands in direct and fixed relation to the commodity that backs it, while not itself being composed of that commodity.^[21]

Fiat money

Main article: Fiat money

Fiat money or fiat currency is money whose value is not derived from any intrinsic value or guarantee that it can be converted into a valuable commodity (such as gold). Instead, it has value only by government order (fiat). Usually, the government declares the fiat currency (typically notes and coins from a central bank, such as the Federal Reserve System in the U.S.) to be legal tender, making it unlawful to not accept the fiat currency as a means of repayment for all debts, public and private.^[22][23]
Some bullion coins such as the Australian Gold Nugget and American Eagle are legal tender, however, they trade based on the market price of the metal content as a commodity, rather than their legal tender face value (which is usually only a small fraction of their bullion value).^[20][24]
Fiat money, if physically represented in the form of currency (paper or coins) can be accidentally damaged or destroyed. However, fiat money has an advantage over representative or commodity money, in that the same laws that created the money can also define rules for its replacement in case of damage or destruction. For example, the U.S. government will replace mutilated Federal Reserve notes (U.S. fiat money) if at least half of the physical note can be reconstructed, or if it can be otherwise proven to have been destroyed.^[25] By contrast, commodity money which has been lost or destroyed cannot be recovered.

Commercial bank money

Main article: Demand deposit

Demand deposit in cheque form.

Commercial bank money or demand deposits are claims against financial institutions that can be used for the purchase of goods and services. A demand deposit account is an account from which funds can be withdrawn at any time by check or cash withdrawal without giving the bank or financial institution any prior notice. Banks have the legal obligation to return funds held in demand deposits immediately upon demand (or 'at call'). Demand deposit withdrawals can be performed in person, via checks or bank drafts, using automatic teller machines (ATMs), or through online banking.^[26]
Commercial bank money is created through fractional-reserve banking, the banking practice where banks keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) and lend out the remainder, while maintaining the simultaneous obligation to redeem all these deposits upon demand.^[27][28] Commercial bank money differs from commodity and fiat money in two ways, firstly it is non-physical, as its existence is only reflected in the account ledgers of banks and other financial institutions, and secondly, there is some element of risk that the claim will not be fulfilled if the financial institution becomes insolvent. The process of fractional-reserve banking has a cumulative effect of money creation by commercial banks, as it expands money supply (cash and demand deposits) beyond what it would otherwise be. Because of the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country's central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators.
The money supply of a country is usually held to be the total amount of currency in circulation plus the total amount of checking and savings deposits in the commercial banks in the country.

Monetary policy

Main article: Monetary policy

When gold and silver are used as money, the money supply can grow only if the supply of these metals is increased by mining. This rate of increase will accelerate during periods of gold rushes and discoveries, such as when Columbus discovered the new world and brought back gold and silver to Spain, or when gold was discovered in California in 1848. This causes inflation, as the value of gold goes down. However, if the rate of gold mining cannot keep up with the growth of the economy, gold becomes relatively more valuable, and prices (denominated in gold) will drop, causing deflation. Deflation was the more typical situation for over a century when gold and paper money backed by gold were used as money in the 18th and 19th centuries.
Modern day monetary systems are based on fiat money and are no longer tied to the value of gold. The control of the amount of money in the economy is known as monetary policy. Monetary policy is the process by which a government, central bank, or monetary authority manages the money supply to achieve specific goals. Usually the goal of monetary policy is to accommodate economic growth in an environment of stable prices. For example, it is clearly stated in the Federal Reserve Act that the Board of Governors and the Federal Open Market Committee should seek “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”^[29]
A failed monetary policy can have significant detrimental effects on an economy and the society that depends on it. These include hyperinflation, stagflation, recession, high unemployment, shortages of imported goods, inability to export goods, and even total monetary collapse and the adoption of a much less efficient barter economy. This happened in Russia, for instance, after the fall of the Soviet Union.
Governments and central banks have taken both regulatory and free market approaches to monetary policy. Some of the tools used to control the money supply include:

• changing the interest rate at which the central bank loans money to (or borrows money from) the commercial banks
• currency purchases or sales
• increasing or lowering government borrowing
• increasing or lowering government spending
• manipulation of exchange rates
• raising or lowering bank reserve requirements
• regulation or prohibition of private currencies
• taxation or tax breaks on imports or exports of capital into a country

In the US, the Federal Reserve is responsible for controlling the money supply, while in the Euro area the respective institution is the European Central Bank. Other central banks with significant impact on global finances are the Bank of Japan, People's Bank of China and the Bank of England.
For many years much of monetary policy was influenced by an economic theory known as monetarism. Monetarism is an economic theory which argues that management of the money supply should be the primary means of regulating economic activity. The stability of the demand for money prior to the 1980s was a key finding of Milton Friedman and Anna Schwartz^[30] supported by the work of David Laidler,^[31] and many others. The nature of the demand for money changed during the 1980s owing to technical, institutional, and legal factors and the influence of monetarism has since decreased.

See also

Wikiquote has a collection of quotations related to: Money

Look up money in Wiktionary, the free dictionary.

Wikimedia Commons has media related to: Money

• Coin of account
• Currency market
• Electronic money
• Fractional reserve banking
• Full reserve banking
• Labor-time voucher
• Leper colony money
• Local Exchange Trading Systems
• Monetary economics
• Money bag
• Non-market economics
• Numismatics — Collection and study of money
• Orders of magnitude (currency)
• Seignorage
• Slang terms for money
• World currency

References

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4. ^ ^{a b c d} T.H. Greco. Money: Understanding and Creating Alternatives to Legal Tender, White River Junction, Vt: Chelsea Green Publishing (2001). ISBN 1-890132-37-3
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8. ^ Mauss, Marcel. 'The Gift: The Form and Reason for Exchange in Archaic Societies.' pp. 36-37.
9. ^ Graeber, David. 'Toward an Anthropological Theory of Value'. pp. 153-154.
10. ^ Kramer, History Begins at Sumer, pp. 52–55.
11. ^ Herodotus. Histories, I, 94
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14. ^ "Online Etymology Dictionary". Etymonline.com. http://www.etymonline.com/index.php?search=specie&searchmode=phrase. Retrieved 2009-04-20. 
15. ^ ^{a b} Krugman, Paul & Wells, Robin, Economics, Worth Publishers, New York (2006)
16. ^ ^{a b} Abel, Andrew; Bernanke, Ben (2005). "7". Macroeconomics (5th ed.). Pearson. pp. 266–269. ISBN 0201327899. 
17. ^ Theory of Money and Credit– Library of Economics and Liberty
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19. ^ RandRefinery.com Retrieved July-18-09
20. ^ ^{a b} USMINT.gov Retrieved July-18-09
21. ^ Jevons, William Stanley (1875). "XVI: Representative Money". Money and the Mechanism of Exchange. ISBN 1596052600. http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=318&chapter=9990&layout=html&Itemid=27. Retrieved 2009-06-28. 
22. ^ Deardorff, Prof. Alan V. (2008). "Deardorff's Glossary of International Economics". Department of Economics, University of Michigan. http://www-personal.umich.edu/~alandear/glossary/f.html. Retrieved 2008-07-12. 
23. ^ Black, Henry Campbell (1910). "A Law Dictionary Containing Definitions Of The Terms And Phrases Of American And English Jurisprudence, Ancient And Modern", page 494. West Publishing Co. Black’s Law Dictionary defines the word "fiat" to mean "a short order or warrant of a Judge or magistrate directing some act to be done; an authority issuing from some competent source for the doing of some legal act"
24. ^ Tom Bethell (1980-02-04). "Crazy as a Gold Bug". New York (New York Media) 13 (5): p. 34. http://books.google.com/books?id=6OUCAAAAMBAJ&pg=PA33&dq=silver+krugerrand.  Retrieved July-18-09
25. ^ Shredded & mutilated: Mutilated Currency, Bureau of Engraving and Printing. Retrieved 2007-05-09.
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27. ^ The Bank Credit Analysis Handbook: A Guide for Analysts, Bankers and Investors by Jonathan Golin. Publisher: John Wiley & Sons (August 10, 2001). ISBN 0-471-84217-6 ISBN 978-0-471-84217-0
28. ^ Bankintroductions.com - Economic Definitions
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30. ^ Milton Friedman, Anna Jacobson Schwartz, (1971). Monetary History of the United States, 1867–1960. Princeton, N.J: Princeton University Press. ISBN 0-691-00354-8. 
31. ^ David Laidler, (1997). Money and Macroeconomics: The Selected Essays of David Laidler (Economists of the Twentieth Century). Edward Elgar Publishing. ISBN 1-85898-596-X.