As the old adage goes, “Money doesn’t grow on trees.” We all know that this is true, but why? What are the traits of money that make it what it is? Ludwig von Mises phrased it best when he stated, “Money is the most marketable good that people can accept, because they want to offer it in later acts of impersonal exchange.”
Many forms of exchange have been used throughout history, starting with the barter system, which worked flawlessly as long as the traders wanted the exact commodity that the other had to trade. When simple direct exchange could no longer be accomplished, the need for money was created.
Money can be nearly anything that people say it is, but there are a few characteristics that it must have in order to be sound money. These include durability, convenience and consistency of inherent characteristics. Sound money must also be divisible and able to be transported. Both precious metals, such as silver, and paper currencies have these necessary qualities.
While these attributes are fairly self-explanatory, there is one more elusive attribute that sound money must possess. Intrinsic value is a more difficult-to-define quality of good money. Misis explains value as something “within us,” saying that the nature of things is not the determiner of value, but it is “our interactions with and our appreciation for them.”
Within this mysterious attribute is where the value of precious metals and paper money diverge. Intrinsic value is, like other forms of value, assigned by those who use it. Investing in precious metals has become a strategy of wise investors, because in its current state, it is more valuable than paper currency. This is because precious metals are both more scarcely and have more utility than fiat currency. The world’s printing presses wildly churn out paper currency to then be further devalued by the actions of unscrupulous governments.
Source:
silver rounds
poppen