I don't have 30 eggs today. I have 5. I'll have 30 by Friday.
I need the bolt of cloth from you today though. If I don't get it I can't make the eggs.
This is contrived, but you see how short term debt automatically must exist for barter to be actually successful?
A futures contract is the modern day abstraction of barter. I'll buy your corn harvest before you even plant it. In exchange you get all the money to actually grow the corn up front. This is just a debt contract.
I don't have 30 eggs today. I have 5. I'll have 30 by Friday.
I need the bolt of cloth from you today though. If I don't get it I can't make the eggs.
This is contrived, but you see how short term debt automatically must exist for barter to be actually successful?
A futures contract is the modern day abstraction of barter. I'll buy your corn harvest before you even plant it. In exchange you get all the money to actually grow the corn up front. This is just a debt contract.