What is "money"?
Thanks to a couple of comments, I have suddenly realized that I have been putting the proverbial "cart" before the horse - since Day 1 on this blog !!
I have invested COUNTLESS hours pointing out the multitude of reasons why gold should (and will) appreciate in value in the weeks, months, and years ahead. However, I have never properly explained why people should value it in the first place. To be fair to myself (after all, someone has to!), anyone who went all the way through the Martenson presentation would already know MOST of these principles.
However, being a pretty fair student of human nature, I have suspected all along that many of you have treated my endorsement of "the best presentation you will ever see" as hyperbole. Frankly, I can't understand how anyone could suspect me of exaggeration - given the conservative, understated manner in which this blog is written.
Before I even get to what money is, I should back up a little further still to explain why we MUST have a formal currency. Given the roller-coaster ride we have experienced in the last year, with suddenly dubious-looking paper "currencies" an important part of this uncertainty and chaos, I can imagine that some yearn for a simpler time - when humanity conducted commerce through barter, the exchange of one item of value for another.
The thought of finishing your day at work, and loading a barrel or two of oil into your SUV, or perhaps a few bushels of grain may seem like a reassuring way of not having much of your daily wage stolen by the banksters - by inflating away much of its purchasing power before you have a chance to spend it.
Sadly, a return to a barter system could NEVER be anything more than a brief, chaotic interlude between one failed system of currency, and the birth of another. An industrialized society could never have been born let alone endured, with only a barter-system to drive the flows of capital.
While this may not be a completely comprehensive treatise, for those wanting still MORE elaboration on this subject, there are a million-and-one links out there to help you fill-in-the-gaps.
Given that we MUST have money, that begs the question "what is money?"
When I was studying economics, this was a question which I don't believe was ever addressed in any of my classes. While that may seem strange, it is much LESS strange when you bear in mind an immediate follow-up question (once the definition is understood): why does ANYONE accept worthless scraps of paper as "payment" or "money"?
For you see, the scraps of paper which our societies have pretended are "money" (ever since the global economy totally abandoned the gold standard in 1971) have never come CLOSE to meeting the universal definition of money.
Real money MUST possess four qualities:
1) it must be a "store of value"
2) it must be scarce (or "precious")
3) it must be "uniform" (i.e. units of currency are identical and interchangeable)
4) it must be easily and evenly divisible
Roughly five thousand years ago, humanity discovered two metals which perfectly satisfied ALL four criteria.
Certainly gold and silver are not the ONLY materials used as money throughout history. Spices were a nearly equal alternative to gold and silver, especially in much earlier times when these substances were not cultivated and grown in the large quantities that they are cultivated today.
Other "precious" metals have been used (with much less frequency), and I'm sure those who looked around could find other inferior-but-usable forms of "money" throughout history. This brings us to the scraps of paper we call "money", but which clearly no longer come close to satisfying the definition.
A scrap of paper obviously can NEVER be a "money", since it doesn't come close to satisfying EITHER of the first two criteria. Paper is neither scarce, nor could it EVER be a "store of value" - with one important exception.
Those who have done themselves a favour and read the commentaries by the eloquent and astute scholar, Darryl Schoon already know the history of how our society went from coins to paper. It's a MUCH too detailed history to include here. Suffice it to say that the first paper "currencies" were created more than two thousand years ago. The evolution of these paper "currencies" has been remarkably similar ever since.
First there was the realization that exchanging paper certificates which were redeemable in gold (and/or silver) for goods and services was more convenient than real money (i.e. the much heavier gold and silver coins). At this same time, there came into existence the bane of our species: "bankers".
The goal of bankers from the first day they were hatched (right through to today) has always been the same, to increase the supply of "money" as rapidly as possible, and then to substitute faux-money (i.e. paper which, itself, was labeled "money") - as quickly as possible (while THEY always hoarded the REAL money of societies - gold).
For two thousand years, the greed of banksters has guaranteed this transition in EVERY society in history. And for two thousand years, the end result has ALWAYS been the same. The combination of grossly excessive amounts of debt/credit, and grossly excessive amounts of paper, faux-money has led to RAPID inflation (i.e the loss of value or purchasing power), mountains of debt, and then economic collapse.
No exceptions - EVER - in two thousand years of the SAME failed experiment.
The gaps in time between these failed experiments is directly correlated to the stupidity of a particular society (i.e. how quickly they forgot the LAST time that the bankers destroyed their economy with worthless, paper).
I'm sure there are some deluded paper-zealots who genuinely believe the crap in our wallets today has been (and still is) better than the hundreds (if not thousands) of previous, FAILED experiments with paper money. This should remove those "blinders" for you.
Since the Federal Reserve was created in 1913, the U.S. dollar has lost roughly 97% of its purchasing power. I would have said 98%, but the recent surge in value of the USD has helped the Fed temporarily claw-back almost a percentage point. And keep in mind that for MOST of the Fed's existence, the USD was partially-convertible to gold or silver. Naturally, most of the damage from the vile bankers has been done SINCE 1971, when Richard Nixon "stiffed" the world to the equivalent (today) of hundreds of billions in gold, by suddenly refusing to honour the U.S.'s gold commitments.
Having demonstrated, in the clearest terms that the USD is a TERRIBLE "store of value" (like all the other paper trash before it), it is equally obvious that USD's are neither "scarce" or "precious". There is literally NOTHING in the world more plentiful than USD's, and with the recent exponential EXPLOSION of "money"-creation, from "Helicopter" Ben's magic printing-press - it is becoming obviously less "precious" by the day.
With the ONLY qualities of "money" possessed by the USD being that it is "uniform" and "evenly divisible", the ONLY thing which separates a USD from a sheet of toilet paper is the belief (created by the banksters) that a USD is worth more than a sheet of t.p.
Does this answer the question "why is gold (and silver) money?" This is NOT an easy concept. It may take weeks, months, perhaps years before it will sink in WHY "precious" metals are money. Fortunately, I have answered almost as important a question: why the scraps of paper in your wallet are NOT "money".
At worst, that leaves you a clear choice between money you may not fully understand, and "faux-money" - which everyone should now know is NOT "money", at all.