Is currency money?

written by Web designers London on March 11, 2014 in Real world with no comments

currency-vs-money

I wanted to write this post a little off topic but effects every human on this planet as currency/money is a form of exchange for time, goods, talent and services, which we all use one way or another.

Take me for example I sell my time and talents for Currency/money to pay bills and live as comfortable as possible and that Currency/money I make gets used again to trade for other peoples time and services that I may require. But is currency the same as money? Well the simple answer is no they are not the same. To get a better understanding we need to look at each one separately and work out the differences.

So what is currency?

  • Currency firstly is used as a medium of exchange
  • It is also a unit of account
  • Currency has to be portable
  • It has to be durable
  • Currency must be divisible so can be divided up as to give change.
  • The currency used also has to be fungible which means a like for like, where the same 1 coin I have can buy the same thing as the 1 coin in your pocket.

These are the premises of what a currency is based on, ok so what is money?

Well money is the same as above but it is also a store of value. So let’s look at it as the money is the thing of value where as currency is a promissory note for the thing of value, or better still currency is NOT money, but merely represents money.

Currency is NOT money, but merely represents money

The give you an example of a store of value, in 1971 to buy 1 gallon of petrol you would pay 33p To buy 1 ounce of gold it would cost you £16.

Today in 2014 if you was to buy the same items you would have to pay £6 for 1 gallon of petrol and to purchase an ounce of gold at today’s prices you would have to hand over £800.

So to understand this, the gold coin in 1971 could buy you 48 gallons of petrol where as in today’s markets the gold coin could buy you 133 gallons of petrol. So that is over 100% increase in your store of wealth if you used gold.

At today’s prices of petrol you would hardly get a few drops of petrol for 33p so this is a good example of the devaluation of currency where as the real money has increased its spending power and has proved a great store of wealth.

So now you have a better understanding of the difference between currency and money where are we today?

Well firstly we need to look at just what type of currency we are using; yes there are multiple currencies in existence.

  • One type of currency is currency backed by a particular item of wealth. The standard backing for currency is the precious metal gold, although other means of backing has been used in the past such as oil or tobacco.

This type of currency works well for the fact the paper notes that are being traded for goods and services that can be redeemed for an actual tangible object which in itself is the true value of the currency note.

  • The other type of currency is called Fiat currency where it is a means of exchange deemed by the Government to be legal tender where the currency is not backed up by anything of wealth.

So which form of currency do we use?

Well sadly it is the later, and I say sadly because we are in a system where we have currency being printed out of thin air and for every unit of currency being printed comes with an amount of debt attached. When you take a step back and look at the system you slowly get the understanding this is a cleverly controlled system devised for one thing and that is to trap the people into a debt based currency for which there is no escape.

If you take a look at this UK £20 note you can clearly see it states: “I promise to pay the bearer on demand the sum of…”

Money

Where does the currency come from?

Well I would bet my last promissory note that 90% + would say the Government prints and supplies the currency. When in fact the Government borrows the currency from a private entity that loans the Government currency with interest attached. Ever wondered where our national debt comes from? Well now you know, the debt comes from the interest from the currency loaned to the Government.

If you would like to know about the creation and supply of currencies below is a great video to explain in simple terms the workings of a currency supply in the majority of most countries.

So how does this affect you and me?
This is a tricky one to answer as the affects of this system can be felt through our past, present and future. You need to understand the fundamentals of our economic system.

The more currency printed and put in to circulation devalues the currency in your hand or bank account. So next time you are in a supermarket complaining about the price rise of the basic commodities. Think of it more as the purchasing power of your currency has gone down.

So what is the endgame?

debtWell this is the biggest question of them all; Why? If you explain this system to most people they will understand the madness but may not believe it is the case.

Surely the brightest minds on the planet are controlling our currency system and surely those intellectuals would work out that if you create a countries currency supply and attach debt for every unit created, at some point down the road there will be more debt than currency?

If this understood from the beginning well I can only come up with the idea that this system was deliberately designed to create the mass debt we are seeing today and our future generations will continue to have this unfortunate burden.

What is the solution?

Well looking deeper into it, there seems to be an inevitable outcome which is a sobering thought as to the mess this situation will inevitably create. A default on the debt and a complete reset of the financial system cannot be ruled out.

We have been witnessing the squeezing of the public services, poor and vulnerable there will be a time when there is nothing left to squeeze.

I am just a voice and all a voice can do is spread awareness, in an ideal world we would have a direct democracy rather than a representative democracy with a countries treasury supplying the currency which is backed by a tangible asset.

I will leave you with a quote I hold dear to my heart

When injustice becomes law, rebellion becomes duty