At one time in history, currency and money were one in the same. Many ancient civilizations divided gold into units, and used it directly to purchase and sell goods and services. Some examples include:
- the Greeks had the electrum drachma, a gold and silver alloy
- the Romans used their gold Aureus coins, named for their goddess of the dawn
- the Aztec people paid taxes with their gold teocuitlatl, meaning "excrement of the gods."
But as civilizations expanded and became more complex, so did their economies, creating the separation of currency and True Money.
Currency is defined as "something that is used as a medium of exchange." Currency is not necessarily coins and dollars. Land, services, livestock, and other goods have all been used as currency in the past, and in some places still are. But the currency we are more familiar with today is paper money. Instead of trading goods and services, paper money is our medium of exchange, and is a substitution for true value.
True Money, on the other hand, exhibits all of the characteristics of currency, but with an additional feature.
Money is defines as "gold, silver, or other metal in pieces of convenient form stamped by public authority and issued as a medium of exchange and measure of value." Not only is money a medium of exchange, but a measure of value, not just a representation of it. The difference is subtle, but critical.
Currency, in and of itself, is not valuable, but valuable because of the money it represents. True money, by its very definition, is inherently valuable.
The currency used in America today falls under the category of a fiat system. "Fiat," Latin for "let it be done," is currency that only has value because of government law and decrees. The government places value on fiat currency, but it does not have true value.
Another difference between currency and money is their permanency. Currency changes constantly. Before the Euro, each nation in Europe produced and ascribed value to its own form of currency-the German mark, French franc, Spanish peseta, Austrian schilling, and so on.
But these currencies were too unreliable and fluctuated too drastically, so a unified currency system was implemented to create stbility. Soon after its introduction in 1999, the value of the euro plummeted, causing a record low exchange rate in the history of European currency. The value of the euro is back up now, higher than the U.S. dollar in fact, but the point is that the problem of fluctuation has not been fixed. Ultimately, every form of currency becomes outdated or loses its value, and must be replaced.
It appears then that question is not if a fiat currency system will fail, but when. In the case of the U.S. dollar, this may come sooner rather than later. The current fiat currency we have in place was implemented in 1971 by President Richard Nixon. Interestingly, no other currency system has lasted more than 40 years in the history of America, so it appears that the U.S. dollar is overdue for a change.
The answer to protecting the value of your money during economic instability lies in our past. Investing more in True Money, like the ancient civilizations once did with gold, silver, and precious metals, provides permanence in the ever-changing fiat economy.
Knowing the difference between currency and True Money is the first step towards investment security.
The next step: investing in gold or silver bullion today.
Article Source: http://EzineArticles.com/?expert=Patrick_T_Langley
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