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What Is The Difference Between Currency And True Money?
Currency has been around in various paper forms throughout societies for generations. People use it every day. But how many people really know what the difference is between paper currency and money?
Currency has been defined as a circulating medium of exchange, used as an intermediary in trade to avoid the use of a barter system. The benefits and usefulness of currencies include; being a unit of account, or standard measurement of value. Other key factors include; durability, divisibility, ease of transportation and being fungible (capable of mutual substitution).
True Money on the other hand, is defined as having all of the attributes above, with one major difference. Money is also a store of true value. Paper currency is actually designed to lose value while true money is designed both to hold and store value. Gold and silver meet these special requirements and have been used as true money for over 5,000 years, thus they will forever be in demand.
Fiat currency is not true or real money; it only has value because of government regulation, decree or law. The word fiat is actually derived from the Latin word meaning ‘let it be done’. Thus fiat money is actually established by government decrees. In America, no fiat currency has ever survived more that 40 years, since its inception in America, during the days of the Continental Congress, before the Revolutionary War. America’s current fiat system is the dollar system which started in 1971. It has now been in-place over 41 years. On target, it’s currently overdue for failure.
The debasement of currencies are accomplished by nations. Through which, additional fiat money is created then added into the existing nation’s money supply. Currency debasement is just another fancy word for money expansion. The end result of this expansion, through central bank efforts is to debase currencies, which always ends up in inflation. The more the paper currency is debased, the greater inflation upon the society becomes, which further drives up the real costs of goods and services. This in effect lowers the purchasing power of the nation’s currency in real time.
How can an investor protect oneself from further monetary debasement and inflation? The answer is actually thousands of years old. Gold and silver are real stores of value. They can protect you from the collapse of currency regardless if it comes from inflation, deflation or the destruction of the paper currency itself, through hyperinflation.
Holding these two precious metals in physical form outside the banking systems of the world, allows you ultimate freedom and complete control. These precious metals also become the best possible insurance for asset protection or hedging that money could ever buy. The biggest reason is because of the unique characteristics that these precious metals hold. Always allowing them to consistently seek their true value, regardless of any economic conditions.
Tom Genot –
2012-11-25 04:51:27
Source: http://coinbullion.net/2012/11/what-is-the-difference-between-currency-and-true-money/
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