By Josh Haddon
(WINDSOR, ON) – There is a difference between currency and money. What you think is money is actually just currency; the difference is both simple and scary.
Today’s currency, the digits you see on your bank statements and investment portfolios, are worthless when using a long enough timeline. Currency is a mass circulated medium of exchange, it is an intermediary in trade as a way to avoid the use of a barter system. Someone like you, who didn’t want to drag her cow to the market and trade it for some other person’s potatoes, thought currency was a great idea.
Having a common currency is both beneficial (to bankers) and useful. Currency is a standard measurement of value, it is durable, divisible, easy to transport and is fungible. Money, on the other hand, is defined as having all the same characteristics as currency, with one major difference. Money is also a store of true value.Today’s paper currency was designed, and is destined, to lose value, while true money is designed to hold or ‘store’ it’s value. What you call ‘money’ today is actually not money at all; it is called ‘Fiat currency’.
The word ‘fiat’ is derived from the Latin word meaning ‘let it be done’. The Latin definition couldn’t be more accurate. Governments can simply print more money whenever they feel like it, and boy have they ‘let it be done’ alright.
Fiat currency is nothing new. Thousands of civilizations have used a fiat system. Many of those currencies have failed, meaning that all the people saving and using that specific fiat currency were left with a small fraction of the buying power they thought they had. Worse still, they were penniless.
There’s a lesson not learned that reverberates throughout monetary history. When governments, any government, come under financial pressure they cannot resist printing money and debasing their currency to pay for debts. Fiat currency is probably the worst place to store your hard earned money.
Fiat currency has nothing behind it holding its value. The U.S. dollar used to be real money. It used to be backed by gold and silver – the real metals you see in jewellery, among other expensive products. Today, the US dollar, and all other modern currencies, are fiat.
I urge you to take some time and do some research on the collapse of fiat currencies throughout history, and what the negative impacts have been.