Money should mainly be seen as a facilitator of trade / by kevin murray

A lot of people value their monetary worth by the amount of dollars or its equivalency that they have as assets.  While, this does make for easy comparisons when people compared their assets in a dollar denomination; this is probably not the best way to actually measure true wealth, for in an era in which the dollar is backed by nothing, and is therefore a fiat currency, this so means that dollars in and of themselves, have worth only to the extent that they are valued by those exchanging their labor or goods for them; and should those that utilize dollars as a medium of exchange, lose their faith in the stability and/or the value of those dollars, such could be catastrophic for all those that have placed their faith in physical or electronic dollars, above all.


In fact, since the United States decoupled gold from the dollar bill in 1971, the value of those 1971 dollars have depreciated to such a large extent, that a single dollar bill of 1971 would need to have grown to about $6.20 in today's money in order to have maintained its purchasing value over that period of time.  This so proves the point that any of those that buried their dollars in a treasure chest in their backyard, and then recover such in the present day, would find to their dismay that those dollars have definitely not appreciated in value, but rather have depreciated considerably in value.


All of the above basically means, that those that store dollars and do not invest such, or do not buy anything with those extra dollars, or do not receive interest payments on those dollars, have in their hands, something that will consistently depreciate in value over time, which is the cardinal opposite of something that has stable or appreciating value to it.  This so signifies, that to look upon money as denominated in dollars as being a stable or as an appreciating asset is a mistake, for dollars clearly are depreciating, therefore the object of the exercise for those that have an inventory of dollars must be to find a medium to exchange those dollars into something that is stable or appreciating, for the mere long term holding of them, is ultimately a losers' game.


Further, it is important to emphasize that dollars should more correctly be seen as a medium of exchange and as a facilitator of trade, of which, by having dollars serve this purpose, it makes it far easier to receive one's payment for labor, to buy goods, and to conduct trade of all types in a straightforward and reliable manner.  To the extent that people use dollars as a facilitator of trade, and of doing business of all types, then the usage of this slowly depreciating currency, is probably just fine, because of its universality and convenience for all parties involved.


However, it cannot be emphasized enough, that dollars fundamentally have no intrinsic value for they are relatively easy to make as well as to print, and further that today's issued dollars are not backed up at the present time by any tangible goods; so that, astute people recognize that dollars are really a means to facilitate the trading of goods and labor, and thereby they make it their point to invest money so earned and to spend those dollars in a manner in which they receive something of value in return, and are prudent enough to know that today's money is fiat paper, and paper does not hold up well over the ravages of time.