Aristotle defined the characteristics of a good form of money – which must be:
- Durable: Money must stand the test of time and the elements. It must not fade, corrode, or change through time;
- Portable: Good money needs to hold a high amount of 'worth' relative to its weight and size;
- Divisible: Money should be relatively easy to separate and re-combine without affecting its fundamental characteristics. An extension of this idea is that the item should be "fungible", defined as "being freely exchangeable or replaceable, in whole or in part, for another of like nature or kind."
- Intrinsically Valuable: This value of money should be independent of any other object and contained in the money itself, starting with rarity.
Throughout history, of course, we have seen people adapt various forms of money using different objects. Here are some examples with relative merits denoted.
Fiat paper currencies remain popular, since they are convenient and can be created at will to please the public. However, fiat money fails the all important "intrinsic value" test, as its value is solely derived from legal tender laws. Compliance with such law rests on the credibility and strength of the issuing authority. And as we know, government and political factions can rise and fall faster than pop stars. So it's no surprise that no fiat money has ever survived over time, and they can never be viable money regardless of technological breakthroughs or other human advances.
“With central banks around the world, particularly the Fed and now the BoE, literally printing gigantic amount of money in order to bail out the banks, which made irresponsible bets on risky and now worthless assets and securities, it makes the case for Gold as a currency even stronger. Our central banks are now cranking up their printing presses at full tilt, you got to be kidding me if you want me to continue holding the paper money they printed!
Personally, I believe Gold is still pretty 'cheap'.”
-- bhc investment, 24 April 2008
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1 comments:
oh this content is impressing as it has referred the great Aristotle's point of view. this is absolutely true those characteristics are informative too before going for some investment. For further more information just click the link Gold
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