Dear reader
Money: "A medium of exchange, a unit of account, portable, durable, divisible, fungible and a store of value"
Currency: "A medium of exchange, a unit of account, portable, durable, divisible and fungible"
This blog is informational as educational. If you are an investor or you want to be an investor it is important to know about money. Money has a long history with ups and downs. Since the Roman and Egyptian empires money has been used to trade goods and services. Starting out with the oldest form of money, gold and silver. In the centuries after that money has developed, changed and eventually now we have paper money, also known as currency.
I have been inspired by documentaries and the book The Richest Man In Babylon to learn more about money. There is so much more to money than just your credit cards and cash you can get out of the ATM. One of my favorite investors to listen to is Mike Maloney. He has a company named GoldSilver.com. On Youtube he has a lot of educational video's. One of his series is the Hidden Secrets of Money series where he teaches you the true roots of money. This week I am diving into the world of money and I am going to explain why it is important to know what the difference is.
History of money:
Money has been around for thousands of years. First people used to trade products with one and other. I can trade you two sheep for one cow. The difficulty with this type of trading is that it does not meet the right requirements for money. Then came gold and silver, gold and silver made up for all the messing parts that trading goods did not have. Since the ancient Romans and Greeks governments have been using gold and silver to pay the workers. Gold and silver is easier to carry around and it can be exchanged at a fixed rate made by the market. This is known as the spot price.
Moving on a bit more into the future, in 1971 president Richard Nixon took the dollar of the gold standard. This is the moment that your euro's, dollars and yuan became currency. We used to be on a gold standard, where each form of currency was linked to a specific amount of gold. So if you would go to the bank you can change your 20 dollar bill for the equal amount in gold. Once Nixon took the dollar of off the gold standard every currency was on its own and gold become a separate commodity reaching its own price upwards of nearly $2000,- today. All the other currencies where pegged to the dollar with floating exchange rates.
Why to know about money?:
It is important to know the difference between money and currency. They say money doesn't grow on trees but currency does. The currency grows faster then that trees can be planted. Because the currencies are now pegged to the dollar, governments are able to print as much of it as they want. This means that the purchasing power goes down every time that the governments print money. If you own gold and silver your purchasing power goes up. During the last market crash the government has printed more money then during the entire financial crisis in 2008.
It is important to know that the dollar has been loosing its value ever since the dollar came of the gold standard. The amount of gold stays the same while the amount of dollars in circulation goes up exponentially. You can't print gold or silver. Because governments are able to print there way out of a crisis the ever lasting debt bubble keeps on rising. If you want to be an investor you need to understand that your purchasing power goes down and that the markets are flooded with debt.
The future of money:
I don't have a crystal ball so I am not able to predict the future of what will happen. What I do know is that every currency that has ever been created has not made it in history. Because of the amount of money being printed it is only that we are doomed for a major crash. The debt bubble has been ever rising and while the price of gold and silver is rising the dollar is falling down. Because of the amounts being printed experts predict no good things. Some fear for major inflation and even hyper inflation as we have seen in Germany before the war.
I do think we are ready for a new world monetary system, I don't believe that we will have a gold standard because the price of gold will rise to over $10.000,-, so a partially gold standard or a cryptocurrency backed currency would be something that could happen in the future. The only thing I can do is prepare. I am making smart investments that can prepare more for every moment. I choose to whom I listen and I listen to both sides of the story. Ray Dalio and Jim Rickards advise to keep a portion of your investments in precious metals such as gold and silver. This is as safety as well as an hedge against inflation. If you compare gold and silver to the major stock markets, gold and silver have been outperforming every market in existence for many years.
The main difference between money and currency is the store of value. Your paper money has numbers on it but it does not store any value, it are just pieces of paper with faces and numbers. I believe that you should always educate yourself and as an investor educating yourself about money is very important to see why history always rhymes. Many countries and nations have dominated the world of money and many have failed. Wealth is also not destroyed during a crash it is rather transferred. I advise you to watch the series and I will include a link to it. Do your own research and be prepared.
Thank you for reading,
Franklin, Moments2Success
https://www.youtube.com/watch?v=DyV0OfU3-FU
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