What is Money?

Money is just an idea. Anything you think of money is true for you. If you think to get money, you need to find a high paid secure job, then that idea will be true to you. If you think, to be rich, it take to be an entrepreneur, that will be also true. So, to be rich, all you need to do is by changing your idea, your thought and your opinion about money.

To understand about money, we need to look back to the history of money. In the early time, money is commodities, i.e. cartels, eggs, seeds. It is called the system barter. People trade to each other by commodities. Farmer will trade a kilo of vegetable to 10 eggs. However, the system does not has a guide line on the exchange to ensure fair trade. And it will be difficult to carry or keep the commodities as such form. Then, shell, gold and silver come into replacement. People started to use precious metals as medium of exchange. People will start carry gold and silver for trading. However, as the these trader started to travel far let said, from Egypt to Italy or France to trade, they are so afraid the gold from being rope.So, these people will store their gold and silver in the safer place let said Egypt and carry piece of paper that represent the gold and silver in storage. People then can carry these piece of paper (receipt of gold & silver in storage) from Egypt to Italy or France to buy goods they want. People who carry these of paper then can go to Egypt to claim the golds and silver.

The paper money continue to be backed the hard assets - golds. Until 1971, new currency system is introduced - fiat currency. In fiat currency, the paper money is not longer backed by hard assets such as gold. In fiat currency, the paper money is back by the government, the IOU . the debt. The fiat currency is a debt back the tax payer from a government. If the government is strong in term of politic, social and economy, the currency is strong. In fiat currency system, the government can print as much money as they want. People need to get themselves into debt to sustain the economy. If people do not get into debt, economy cannot growth. If the people cannot take anymore debt, the economy will contract.

The problem raise when the economy is contract. The Government will do something. The government will give cheap credit by lowering the interest rate and pouring money into the market by simply minting more.This will deplete the value of the currency, or shall we call the inflation. The consequences, the more you save, the more you lose. In today economy, trillion of paper money is printed to support the downsizing of economy. Think about the long term effect of that, will your paper money really worth what you had perceived yesterday? I leave that answer to you.