How would you explain Money to an Alien?

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Any Economics experts out there?

Money is used as a method to exchange good and services between people without the requirement that both sides need the items being exchanged.

So money is a method that removes the need for barter system, which is not an efficient system. Ok, can the alien ask a question? What is this method, I mean how or what do we do in this method?
I think that might require a very complicated answer. Oh well.

Sacred power chips.

The natives here use these sacred thingamajiggers with pics of presidents on them, and they signify power. And we exchange them for goods and services.

Last edited by naturalplastic on 05 Mar 2014, 8:34 pm, edited 1 time in total.

Let me ask this, does the alien understand the concept of trade of goods or will that have to be explained too?

Money is the advanced form of barter.

If our Alien's race has traded at all it is fairly easy to explain.

ruveyn

Trade of goods as in exchange of goods? Yeah, that sounds simple enough.

“This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.”

Douglas Adams

I'd start by showing the alien how the barter system works by giving him a sack full of turnips and taking his flying saucer.

@ tallyman

A government-guaranteed token as an enhancement to the barter system. Taken at face value, it behaves in much the way that an unregulated free market does - it resembles the natural workings of biology, of cellular metabolism - the cut and thrust and give and take of life itself.

However, this process can be hijacked and made to work in a fashion which is detrimental to the health of the organism as a whole, as we have seen recently...


...or something...

I like your sig. Easy as pie.

In a trade based system, money is used in place of barter. Money is symbolic of one's potential for trade, as the lack of it is also symbolic of one's inability to trade.

Thanks everyone for your replies. Now my utter ignorance regarding finance/economics/money has changed to mild ignorance. I found some links on the net that were helpful as well -

What is Money?
The Gold Standard (How Currency Works)
Rule of Supply and Demand...debunked?

Ok, I get the biology analogy and that the process can be hijacked, but what guarantee does the government give and how. And how do people believe this guarantee? Is it really like what Lewis H. Lapham says in the Gold Standard link above?

If it is just a symbol, how does the symbol get etched so firmly in people's minds (including mine)? How does a mere symbol cause such massive upheavals in the physical world? I'm not questioning money's ability to do this, I'm just seeking to understand how it does that (and my ignorance regarding finance doesn't help much ).
You don't have to explain how it affects each thing, I'm just trying to understand where and how a symbolic thing gets that kind of power.

Aliens don't need money.

Possibly because it's easy to keep track of, and has universal appeal.

Why do Diamonds have the same effect on people? People will kill for them, enslave others to get them, and wars are fought over what is essentially nothing more than crystallised carbon which is made easily enough. --Personally I find the allure and cachet ascribed to a crystal that has some pretty good practical uses to be equally baffling, yet a lot of people seem to get some form of personal satisfaction wearing them as ornaments.