The True Value of Currency

 If you think that money is the most valuable assets and having a bunch of those in your bank account can make you safe from any crisis – chances are, you are fooling yourself.

You are exchanging your most valuable assets for money. Your time and freedom. Those are your true wealth. Money is an instrument you acquire by trading your time. It a social constructed in your brain that having a secure job, a house, a car, and securing a pension is the way life is. However, reality is not that easy. You and many people around you were being deceived from real money and was tricked into using currency. A piece of paper that had no intrinsic value.

Welcome to the rat race.

Wealth is never destroyed; it is merely transferred. And that means on the other side of each crisis there's a chance. The great news is that each one you've got to try to show this crisis into your great opportunity is to teach yourself. I believe that the simplest investment you'll make in your lifetime is your own education.

Education on the history of money - The values and properties. Education on finance. Education on how the global economy works. Education on how all of those people, the central bankers, the stock exchange, the lenders, how they will cheat you. How they can scam you.

Winston Churchill once said that the further you look into the past, the further you can see into the future. That is why education on related matters like history are important in order to get a better understanding. If you don’t have the basic knowledge about these things, you might get yourself fallen into their trap and lose your freedom along the way, as how others before you experienced.

If you learn what's happening and the way the financial world works, you'll put yourself on the right side of this wealth transfer. Therefore, having insights on this is no longer an option, it is an essential requirement for your well-beings.

Everything began in Egypt. About 5000 years ago, the Egyptians had used gold and silver as their main form of currency. But it was not yet money. The pieces of gold and silver that they were using were odd sizes and weight. Odd purities. So, it is still not interchangeable were each unit is the same as the next. This meant that nothing had a price yet. 

You couldn’t put a price on so many coins on something because they didn’t have coins yet. Trade was still difficult. It was still a guessing game when it came to the exchange of values.

Mainly, the reason why the world was always in a complete mess in regards to currencies was that they do not understand the differences between money and currency.

The characteristics of currency is that it is convenient, strongly made or durable, can be divided and something called fungible. Fungible means that each unit is the same as the next unit. Fifty ringgits in my wallet had the same value as the fifty ringgits in your wallet.

Money on the other hand had all of those characteristics along with an intrinsic value stored in it over a period of time. A lot of people including the financial planners, bankers, your accountants, don’t understand the differences between currency and money.

The currency that you are holding right now, the ones that you traded your time and freedom for it was used as a medium of exchange. They had values because of the number printed on it. You can use it to buy things with it, store it, and it can last for a certain amount period of time.

But because government can print more and more of it and dilute the currency supply, it’s continually transferring wealth out of your pocket, out of your bank account to the government and to the banking system.

That is why gold and silver is the greatest characteristics of money because of the large amount of value that they can store in a small area.

It is a unit of account. The value of pure gold had the same value in other parts of the world. So, a gram of gold is the same amount in Malaysia as it would in Egypt or the United States.

It is durable. The same gold the Egyptians were using in trade 5,000 years ago is still here with us today. It does not corrode. It’s divisible. You can make change with it. It is very portable.

You can use something like oil as money. It’s just that you can’t carry around a barrel of oil on your back.

If you take a look at the currency of dollars circulating in the world from the diagram below, you can see that the amount of dollars printed had been skyrocketed. This shows that dollars are being created more and more out of thin air, backed up by nothing.

Monetary base - currency in circulation

 Source: Fred economic data

Although gold and silver had the same value wherever they are on earth, they are fungible, they are limited and cannot be reproduced, unlike fiat money. That is why gold and silver are able to maintain its purchasing power. Governments cannot print it.

The previous fiat currencies that were not backed by gold and silver have all gone to zero. It had been recorder that more than thousands of currencies had failed before. It is a 100 percent failure rate. What makes the dollar you are saving right now, any different? Only a matter of time before those too lose their values.

References 

1) Fred Economic Data. Monetary Based; currency in circulation.  https://fred.stlouisfed.org/series/MBCURRCIR 

2) Gold in ancient Egypt. (2017). The Met Museum. https://www.metmuseum.org/toah/hd/egold/hd_egold.htm 

3) Charlotte Vantieghem. (2012). Monetary Practices in Ancient Egypt. https://www.nbbmuseum.be/en/2012/05/nederlands-geldgebruik-in-het-oude-egypte.htm