Understanding Money – Part 4 – Money in a Modern Economy

For the definition of money see article…

As we discussed in part 1 the first requirement of money is that it holds a stable value over time with the introduction of a money that did hold its value over time we were able to progress from the restrictions of barter to the modern economy today if a manufacturer of goods is to expand their business then they must invest in new plant equipment and training if

Successful those investments result in more production and more jobs in the same way if an entrepreneur sees a business opportunity then they must also make an investment if they wish to take advantage of that opportunity in most cases the money for these investments has to be borrowed where else are the manufacturers and entrepreneurs going to borrow the money if

Not from people who have saved it money must be accumulated in the form of savings without saving there can be no borrowing without borrowing there can be no increase in production and no new jobs there must be an excess of money in the form of savings so that bowling can take place the problem is if money is not a store of stable value over time then there is no

Incentive to save money why save money if it is going to be worth less in the future than it is right now this causes speculation to become common as people desperately try to get around the problem that their main does not hold value over time speculation is investing in the hope of large gains but speculation always carries the real risk of large losses when money

Is not a store of stable value than saving decreases and speculation increases this leads to a fall in the production of real goods and services people have to save for their retirement they must be sure that the money they save during their working years will have the same value years later when they retire without this certainty pension fund managers are forced

To speculate to try to ensure that the funds entrusted to them do not lose value the more that a money fails to hold its value over time the more the bank’s pension funds and individuals are forced to speculate and take on ever greater risk most people would rather be savers and speculators speculation is very risky but less risky and saving money that doesn’t hold

Its value over time whenever there is too much speculation and too little saving and production then the cause is always the poor quality of the money is it your observation that we have a lot of speculation in the world today and very little saving or production of real goods then by now you will be arriving at the inescapable conclusion that the situation we are

In today is not a global financial crisis it is a global monetary crisis once again experiments with paper money are failing the problem is that this time due to globalization all paper money is failing at the same time getting out of paper money and into real money is not an investment it is an absolutely essential survival path for you your family your friends

Your neighbors your society your nation and your world gold is the very best money available along with silver it is usually the only form of money acceptable do you have anything you

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Understanding Money – Part 4 – Money in a Modern Economy By goldstandardinst