A BASIC BUT IMPORTANT QUESTION: "What is Money?"

I know we can all agree that money is "something that can be earned and spent and taxed".   That "money" is demanded by tax authorities, utility companies and most retailers in the form of "fiat" US Federal Reserve Notes here in the USA and not uncommonly elsewhere on planet earth.

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But did you know that in other societies in the past that "money" as a medium of exchange could be manifest not in paper but instead in large stone wheels one had to store and could exchange title to even without moving it?    Other "money" even included things like beads, drinks (usually alcoholic in nature) and drugs, feathers of certain birds, foodstuffs, furs of animals, jewelry, skulls and bones of animal and human origins, and a substantial number of other "unique" mediums of exchange whose list would take up far too much space here to detail out for you.   But today, we are caused by circumstance to have to use "fiat" paper currency, "sandwich" coins with very little if any precious metal content and even "electronic beeps" to transfer possession or claim to "imagined to be valuable" money, and counted as valuable intellectually only because the government tells us to perceive it as valuable.

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But here's "the rub": While "fiat" (no precious metal value content or backing)  money used to pay bills to common vendors, stores and government tax authorities remains still only a "legal medium of exchange" and not really so different than those ancient large stone wheels, native American wampum, etc., most Americans have a confusion about that U.S. 'fiat" currency.   Here's the bottom line point to this week's blog: Today "fiat" US dollars must and should, for at least the time being and for convenience sake, indeed be used as a medium of exchange, but ONLY AS A MEDIUM OF EXCHANGE...BUT NOT AS A SMART PLACE TO RETAIN AND TO STORE WEALTH. 

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Back in mid-2011 Mr. Bernanke, head of The Federal Reserve, was asked by both a television newscaster and some governmental officials if gold was money and Mr. Bernanke skirted the question by saying that banks hold gold sometimes as a "tradition" but that gold really is not money.   He was chided for saying that, but actually he was right!   U.S. "fiat" dollars are money currently in use as a medium of exchange...but what Mr. Bernanke didn't say was this: Gold and other precious metals CAN AND HAVE BEEN FOR OVER 4,500 YEARS BEEN VIEWED AS MONEY BUT IN REALITY IS ACTUALLY JUST A SMART PLACE TO STORE WEALTH (instead of in monetized debt instruments like the U.S. "fiat" Federal Reserve Note).    

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DID OR DO YOU NOW SEE THE DISTINCTION BETWEEN THE CONCEPT OF "MONEY" VERSUS "A STORE OF WEALTH"?    Money can be earned and spent, but its' value is at best a government sponsored myth, and it is today a monetized debt instrument common to the Western world.    But gold, silver, and other precious metals have intrinsic value in themselves worldwide...and they are NOT monetized debt instruments and are also not subject to inflation as "fiat" money is.  

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Did this help you to understand why you do need to personally have and hold precious metals?   If you are to have wealth of any kind, tomorrow, next week, next month, next year, you must find a far better place to retain and store such wealth.   You will live to regret making the serious financial mistake in storing your wealth in "fiat" money.   As a store of wealth, "fiat" money has always, without exception, eventually fails.   However, precious metals (I personally suggest a bit of gold and lots of "survival silver") especially are commodities that have value in their very existance and are seen accurately worldwide as being valuable, throughout human history.   This fact alone is especially important to also know about this fact as inflation debases the "fiat money" to ever lower value on a sometimes minute-by-minute basis, but precious metals, while their prices do fluctuate from time to time, have never been worthless or of no value in recorded human history.

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Check out e-Bay and look up what gold and silver coins are selling for these days there and the values that compare the U.S. "fiat" dollar to the pre-1965 silver dollar, half dollar, quarters and dimes.   When a dollar was a dollar, it didn't matter if it was paper or a precious-metal content coin...but in 2012 is really matters far more than most Americans realize or understand.    If permitted, I would also suggest that you visit a website named www.Coinflation.com and see the value of the silver in all those pre-1965 coins I've been "preaching" to you to acquire before your "money" returns to the "thin of air" from where it came.

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And, once again, I suggest that this blog is at the very least food for thought, is it not?

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Respectfully submitted,

Thomas Avery Blair, EA