Why the Dollar is Not Money

December 12, 2008 by Grams

Few people realize that the dollar is not money and so they leave themselves open to be robbed. The dollar is a fraud that has been foisted on an unsuspecting public by governments inflating the money supply. Let me explain.

Real money has certain desirable features that allow it to function in commerce. These required features or criteria were developed over centuries of experience in trade. Time tested features of true money include -

1. It must be a medium of exchange. In other words it must be available in sufficient quantity, be easily tradable, and have only a small difference in price between buying and selling. The money should be easy to transport - which is facilitated if it has a high value to weight ratio. In some of these respects the dollar qualifies as a medium of exchange, but read on.

2. It needs to be a unit of account. The money should be capable of being divided into smaller units without damaging its value. In the case of precious metals like gold, silver, and platinum, they can be traded as bars or melted down and formed into much smaller units like coins, and if required, melted down into bars again. This is why olden day barter goods like wheat or animals are not suitable as money.

3. It must also be fungible. This means that any one unit should be identical to another of the same unit. For example two coins of the same unit should be identical in size, weight, and metallic content.

4. It helps if money is a fixed weight or measure so that it is easy to count. Paper notes for example have different face values but weigh the same, making them a poor measure.

5. Most importantly, money should be a store of value. After all, if you exchange goods or property for money you want something of equivalent value in exchange. Paper money is just pieces of paper with pictures on it and has no intrinsic worth, yet every day people exchange worthless pieces of paper for physical goods. This state of affairs has only existed in the last century and will not last much longer.

6. The value must be stable and not subject to major fluctuations, and it must be real and genuine, not an artificially created value, as with paper money.

7. In addition it should be difficult to counterfeit while still being easy to recognize. Once again paper money fails this test.

Centuries, and indeed millenia, have resulted in two metals in particular assuming a leading role as money. These metals are gold and silver, with copper filling a minor role. Gold and Silver meet all the requirements listed above.

When gold and silver were used as money, inflation was vitually unknown. Inflation is associated with the fiat money (paper money) system that is now in place across the world. Governments print paper money (or the electronic equivalent) in steadily increasing amounts which inflates the money supply. This increased money supply pushes up the prices of the fixed amount of goods and services that are available. This is what causes inflation. Inflation is a thief which steals your wealth because the value of your cash is continually decreasing. A dollar today will only buy 5% of what a dollar could buy back in the 1920's when the U.S. and most countries were still on a gold based monetary system.

One way to preserve wealth in inflationary times is to purchase items which are stores of value. Anything which cannot be produced in ever increasing amounts qualifies, but only gold and silver which are limited in supply and difficult to obtain are qualified to also act as money. Gold bullion and silver bullion, along with gold coins and silver coins are becoming increasingly scarce as investors seek to preserve their wealth in these inflationary times. Supply is diminishing while demand is increasing. Check out the prices and availability online and buy bullion while you still can. The dollar is about to be consigned to the scrap heap of history, to be replaced by real money.