Money acts as a medium of exchange and as a store of value. But what does it mean when we say that money is a store of value. It surprises me that even economists, analysts and money managers appearing on national television seem oblivious to this important role that money plays in our financial system.
I think the fact that money acts a medium of exchange is better understood by the general populace, however, money as a store of value is less so.
The most important underlying concept is that for money to be a store of value, it must maintain its purchasing power now and over a period of time. Not so with the currencies of today. All currencies, including the world’s Reserve currency, the US Dollar, have failed to maintain their purchasing power and hence have failed as a reliable store of value.
We need to look a step further and ask ourselves why is this the case and who is responsible for this so called devaluation in purchasing power. I can sum it up in one simple word, “Government”
Ask yourself these important questions:
-Who has the ability to create paper money out of thin air?
-Who controls the so called printing press or electronic equivalent of today?
Governments are in a “bad habit” of continuing to increase the money supply, thereby diluting the value of that particular currency. In this comes about there erroneous understanding about inflation and what it actually means, which I will cover in the future.
Remember, Gold cannot be printed and has acted and will continue to act a reliable store of value.
