Currency notes issued by the Nigerian Government.
Look closely, the Nigerian pound has "promise to pay on demand one pound"
What does that mean, the note says One Pound already, so what is being promised?
Lets talk about money
Look closely, the Nigerian pound has "promise to pay on demand one pound"
What does that mean, the note says One Pound already, so what is being promised?
Lets talk about money
The paper you have in your wallet is Money...its not actually "money".
Money is the gold or silver or assets held by the bank or nation that issues the currency.
A Naira note is simply the Central Bank of Nigeria saying, if you give us gold, we give you Naira, Virse versa
Money is the gold or silver or assets held by the bank or nation that issues the currency.
A Naira note is simply the Central Bank of Nigeria saying, if you give us gold, we give you Naira, Virse versa
Same for the US Dollar.
The US Treasury is saying, "give us gold and we give you paper ...called dollars."
So Currencies are bonds, instead of your gold, you trade that paper.
Again look at US Dollar. ..no promise to repay your gold.
Hmmm
The US Treasury is saying, "give us gold and we give you paper ...called dollars."
So Currencies are bonds, instead of your gold, you trade that paper.
Again look at US Dollar. ..no promise to repay your gold.
Hmmm
So let's backtrack.
Banks and Governments took in deposits of silver or gold and issues paper called notes
See this earlier dollar, with promise to repay.
This means, banks and governments could NOT print notes, because they needed gold or silver
This is a problem. Why?
Banks and Governments took in deposits of silver or gold and issues paper called notes
See this earlier dollar, with promise to repay.
This means, banks and governments could NOT print notes, because they needed gold or silver
This is a problem. Why?
In a recession, only the Government has the means to spend. However if its held back by having to have gold, then no deficit spending.
So the US left the gold standard, thus US dollars were no longer exchangeable for gold or silver, but by "Full Faith of the US Government"
So the US left the gold standard, thus US dollars were no longer exchangeable for gold or silver, but by "Full Faith of the US Government"
All other nations then followed.
This is why all Government could simply print cash to fight COVID 19.
Its simply paper.
However, no Government simply just prints, so they instead tie their currency to credit rating, exports etc.
US has an AAA rating. Zimbabwe does not...
This is why all Government could simply print cash to fight COVID 19.
Its simply paper.
However, no Government simply just prints, so they instead tie their currency to credit rating, exports etc.
US has an AAA rating. Zimbabwe does not...
When a nation without gold, with limited exports, simply prints currency, there is no "Full Faith" backstop, and you get Zimbabwe...
So we returns to Nigeria.
The Nigerian pound was backed by an asset, probably Gold, then the Nigerian Government uncoupled that link
Today, the Naira is backed by Crude Oil, thus when Crude fall, the Naira note you hold in hand, falls in value...and Dollar raises.
The Nigerian pound was backed by an asset, probably Gold, then the Nigerian Government uncoupled that link
Today, the Naira is backed by Crude Oil, thus when Crude fall, the Naira note you hold in hand, falls in value...and Dollar raises.
When you trade currency, what you are actually trading is a commodity.
When you buy Euro and Sell USD, you are saying the European economy in future will better than the US economy.
The future can be 10 seconds or 10 years.
When you buy Euro and Sell USD, you are saying the European economy in future will better than the US economy.
The future can be 10 seconds or 10 years.
