I dont understand Money

http://www.bbc.co.uk/news/business-23588958

I have to be honest. I don't really understand money. But i suspect this is a very common experience. Ok i know what £12.50 can possibly buy. After yesterdays experience two grim sandwiches and matching teas in a cafe nightmare in Haworth. But beyond simple markers of exchange i, and most people, have a sketchy grasp on the reality of money. I see frequent references on various political blogs and posts to the idea of Fiat money. This being the argument we have dishonest money based on printing rather than the honest money clearly linked to Gold in the bank or the precious metal content of the coin being used. And I have at times come across the debates around the history of this. Isaac Newton became a sir for his work at the mint preserving the value of the currency. But debasing currency hasn't taken place simply through physical removal of value. From Diocletian onwards the effort to maintain the value of currency has been in vain as inflation and all the other fluidities of economics washed it around.


All this can seem like a abstract academic debate until you come across the realities of personal finance. At the moment i own outright one hues but live in another belonging to my girlfriend and for which i dont pay rent. Bills but not direct housing costs. Now the house i own has a value. Possibly around £80 to 90000 but that depends entirely on what i could get for it which depends on what someone else is prepared to pay. They will pay according to more reasons than how wealthy they are. If they have cash they will expect to pay less. If they need to get a mortgage they will pay less according to how frightful, both now and in the future, that process appears to them. If the economy seems to be doing well they will be more confident about paying more if they foresee a higher future price. But the the corollary is true.  Obviously there is a point at which i would not sell as it would seem to low to me. However what is too low? If i get £80 000 and put it in a bank what does that mean and what will become of it? MArk Carney the new Bank of England chap seems to be clear it means the value will not expand unless i do something more adventurous than leave it in a savings account. However i am risk averse so there is little chance of that.