Commodities Vs. Fiat Money: Be Prepared For Any Economic Collapse
When we come to think of value, or how much something is worth, we usually tend to think about paper money. The question is, why do we see 1 million dollars as something that has a lot of value? In the distant past, there was no paper money.
There was gold, silver, and commodities traded. Now we trade paper, and its value comes only from the government. The government told you that paper was valuable and instead of trading goods such as silver, gold, and commodity money, people started to use paper money.
Now, many people are not prepared for an economic collapse or inflation, because they don’t understand the way fiat money and commodities work. Well, I am writing this article to arm you with valuable knowledge and give you a different view about paper money and commodities, such as gold.
What Is Commodity And Fiat Money?
Commodity money has value, that was not placed by government, but by it’s own rewards. Commodity money are things such as gold, food, and other precious metals. Things such as food has its own value because it is a necessity in life, while gold and precious metals are valued by the people and its materialistic use. Gold and metals can be used for a variety of different reasons from jewelry, to building structures. These things have value for their own sake, while fiat money has value, because the government said so.
The Riskiness And Unreliability Of Fiat Money
Overtime, people stopped using the sound money of gold and other precious metals. People started using paper money, because it was easier to carry around. The government has more control over people when fiat money is mostly used, because the government can cause inflation. Inflation happens when more money has started circulating, because the government has borrowed money from a source, or started printing more money to accommodate debts.
The more money the government acquires that was not already circulating throughout the population, the more money they can dish out to certain people, which in turn increases the amount of money circulating. When the amount of money circulating increases, inflation happens, and products and services start to become more expensive.
This stinks for a lot of people, because many people don’t acquire more money to accommodate inflation. So, now the amount of money you were making has less value. Fiat money mostly always begin to lose some value, and that is why many are not prepared for any type of economic collapse, because they have too much paper money. So, the question remains, “how can you prepare yourself for an economic collapse, or inflation?” Read on.
The Power Of Stable Investments
Things such as gold, precious metals, and food will always be valuable, because history tells us so. Gold and precious metals have relatively been the most stable over the course of time. These are things that the government, or for the most part, an economic collapse have little affect on.
These things are not at the mercy of inflation, so in order to protect your worth, your should put some money into investments such as gold, or precious metals. Do your due diligence on gold, and other metals to protect yourself from inflation and an economic collapse. Since 1913, the U.S. dollar has lost 96% of its purchasing power, while an ounce of gold in 1913 and today can buy about the same thing.
Gold goes up when inflation occurs, keeping the people who invest in it safe from inflation. So, continue to arm yourself with financial knowledge and learn to prosper. Study other reliable investments and keep your money safe.
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Lawrence Berry
41 Posts | Member since 2014-01-11
Lawrence Berry is the founder of the GrowWiseGrowMoney.com website. He created the website to help people successfully pursue happiness by learning how to acquire financial freedom. The website generates ideas on passive income, provides financial encouragement, and share financial wisdom. Lawrence Berry has found his passion in personal development, helping others succeed, and help others be able to fully live life. At the tender age of 22 he has recently graduated college and will be attending medical school.
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