9 April 2008

History of Money

In Indian National papers there have been articles discussing whether Gold is a safe haven for investors. With western countries undergoing serious financial meltdowns and banks failing – people are seriously questioning the intrinsic value of money in the form of currency. I recall about fifteen years ago Sri Sathya Sai Baba is reported to have advised students that: “In the future there will be a world financial crisis, so don’t leave your money in Banks or Trusts, decide where you want to be and make yourself as self sufficient as possible.’

In this respect Land and Property are the two items with the most intrinsic value – because with them you have a place to live and where to grow food. It certainly would be grand to have that safe haven situated here at Arunachala! Anyhow curious as to the history of gold and the financial underpinning of ‘society’, I decided to do some research:-

The history of money consists of three phases:

(1) Commodity money, in which actual valuable objects are bartered
(2) Representative money, in which paper notes (often called 'certificates') are used to represent real commodities stored elsewhere; and finally
(3) Fiat money, in which paper notes are backed only by the traders' "full faith and credit" in the government, in particular by its acceptability for payments of debts to the government (usually taxes).

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Divya said...

"Flat money" definitely sounds like the shakier value! You are right, best to have living quarters, land and a water supply, for best security. Uh, until a natural disaster happens,that is. Then bank balances still with value, would be next best...

Arunachala Living said...

'Flat money' is now euphemistically called 'dead tree money,' when you put it that like that its kind and makes paper money sound rather insubstantial. Now a nice heavy gold brick - looks and sounds much more the thing!