What is a Better Monetary System #2: Bargaining or Money? (Essay Sample)

What is a better monetary system: bargaining or money?
Student
Institution
What is a better monetary system: bargaining or money?
Monetary systems since introduction have been associated with various challenges. There are ranging debates as to what constitutes a better system. Trade and money are the two primary systems that have been adopted by many governments throughout the world. In the recent past, there have been issues concerning the appropriateness of the monetary systems. The financial crisis in the year 2007/2008 called for a critical review of the policies in place. Whereas bargaining policy can spread the risks of the currency fluctuations and thus absorb the economic ups and down, money system saves time and enhances equal distribution of resources. In this paper, we shall demonstrate why bargaining system is a better monetary system as compared to the bargaining system (Cordeiro, 2000).
Bargaining refers to a process of buying goods and services whereby the buyer and the seller agree on the prices through haggling. In macroeconomic terms, the term refers to a monetary system where the terms are to be negotiatiated. These terms are based on various parameters and adjusted based on various factors such as the economy and the country needs. Imposition of limiting monetary policy on a wage bargaining context where the workers have considerable rights could result in catastrophes. The system allows the equitable distribution of resources as it allows price discrimination and equal allocation of the resources. The system allows for the adjustments that are necessary to bring balance to the country's economy. Thus bargaining is superior to the money terms in that regard (Deist, 2011).
Money system though widely used has been catastrophic. Money in the various forms is subject to manipulation. Individuals may chip metal money and then it’s injected into the economy thus destabilizing the economy. Paper money is a bit complex and uses coding systems that are hard to copy. The manipulation of the paper money is from the issuers. These includes the central organizations and as well the commercial banks. There are strict rules that are aimed at cautioning against such manipulation. As witnessed in the global recession of the year 2007/2008, there is no absolute system. A hybrid of money and bargaining system would have cautioned the impacts.
In difficult economic times, the resources available to the government institutions are scarce and thus an appropriate compensation plans are essential. In the money policy, the government will ideally fix the wages and thus creating the uproar from the labour unions. In such situations, bargaining becomes a better alternative as is prevents strikes and ensure everyone understand the situation and agree on the best approaches (Aruga, & Hungerford, 2011). In the money markets, the fluctuations of the market rates create market uncertainties. At the same time, a fixed rate creates a rigid system and dominance thus the unequal distribution of wealth. The ideal solution to such problems is to create a market system where all the factors are put into place and the trading parties are allowed...