Do You Know The Difference Between Money And Currency?
Money and currency has been the hop topic for over 2500 years, but can you really describe the difference?
Money and Currency is something we heard of all our lives and yet we've used these two words interchangeably, especially the word Money quite often. But yet there is a difference, Go Figure!!!
If you're in the network marketing/MLM industry your ultimate goal would more likely to be financially free. We all want to make a monthly income of at least $10,000, $25,000, $50,000 or whatever it may be in order to come out of our current financial status.
But when it comes imagining that monthly income, what is the first thought that pops into your head? If you were like me, more than likely it was the dollar bill cash that you see on rap videos. We all want that PAPER!!!
Now comes the question. Is that PAPER actually money or is it currency?
Well, lets get a better understanding by digging into the past a big
MONEY AND CURRENCY HISTORY
Thousands upon thousands upon thousands of years ago ancient people use to barter, which mean trading goods with other goods. So I could probably get one cow for a dozen chickens and so forth.
As the bartering system went on Gold and Silver were also use for trade. Gold and Silver were used for trade for thousands of years, all the way up until around 680 BC in ancient Greece. Around this time, the ancient Greeks Minted these two metals into coins, which in turn led it to be considered Money. The reason it was done was to make trade much easier and smoother.
Now Paper Currency as we know it today, wasn't really used not until the early 1700's in France. The Duke of Orleans was placed as regent (Temporary King) and saw that France's economy was in bad order because at the time it was so deep in debt that taxes couldn't cover it.
John Law who actually came from Scotland, actually introduced paper currency to The Duke of Orleans, which help France to pay back it's debt which made John Law a hero and as a result he was granted many perks such as being given a bank and the right to issue paper money.
Now in the USA, Paper Currency was always backed by Gold and Silver. But in 1964 Silver was taken off, and around 1971, Gold was taken off. Since then our paper currency has not been backed by anything.
What does this mean?
This means inflation! Meaning if you're not able to purchase as much as you did with $100 five years ago compared to today, then the purchasing power of that $100 has been diminishing.
A great example are the gas prices. Remember about 10 years ago you could fill your take up with just $15? Now it takes about $40 dollars to fill up your tank. That's one big increase in price. Inflation ain't no joke!
Still confused on the difference between Money and Currency yet? Well lets get down to it.
Up until now, the majority of you probably thought that Currency and Money is one of the same. Well it's not. When you get your cash from the bank, or when you cash your paycheck, that cash is actually currency, not money. Currency is actually a medium you would use to exchange for something of value.
Medium is a key word. The word Currency is derived from the word current, and you can compare it to an electrical current. It must keep moving or else the current will die. So basically you use your cash to transfer value from one asset to another. Currency is not valuable in and of itself.
Now unlike currency, money is valuable in and of itself like Gold and Silver for example. Another great thing about money is that it can be used also as currency, but not the other way around since currency isn't valuable in and of itself.
Yea, this can be hard to grasp, but think of it like this. Going back to the first question I asked about the $100 of cash. Is it the paper of the cash worth $100. Not at all!
That paper is the representation of a value that's stored somewhere else. And up until 1971, it was Gold and Silver. Now our paper currency is backed up by nothing, which causes inflation as a result. Our US government is just printing paper currency at will. Many of you may call it counterfeit but our government calls it the "fiscal policy". The correct term for our paper currency is called fiat currency.
If you were to pull out your American dollar you will see at the top it reads "Federal Reserve Note", which means it fiat currency. Before 1964 it used to read "Silver Currency" meaning it was backed by Silver.
What Can You Learn From This?
This was definitely to educate you on the difference between money and currency. Gold and Silver have had purchasing power over other hard assets for over 4500 years. Yes since the ancient Egyptians.
The one thing that most of us want is the purchasing power to enjoy the things that our societies have to offer. The thing that destroy most of the societies of the past was inflation, which mean those societies made a system using fiat currency.
Those that were smart and survived invested in Money and held it. This is why so many smart investors are looking into Gold and Silver because of our economic situation.