When people talk about people who ‘have’ money I often try to understand their context before applying myself to the discussion.
Frankly, there’s right now little to no money in the banks of the world. They only hold currencies. True money in today’s world has a slight variation from the dollars, pounds and yen of this world.
So let’s define both by their qualities and see;
- a medium of exchange
- a unit of account
- and, interchangeable
So how is this different from money? Someone might ask. Isn’t money all of this?
Indeed! Money possesses all of these qualities but one additional quality that distinguishes it from currency, which is that:
Money is a store of value over a long period of time.
The value of currencies are determined by government interests per time, but the value of money is determined by its scarcity. Examples of money are precious metals like gold and silver. They possess all the qualities of a currency plus they are a store of value over a long period of time.
So next time you find somebody referring to the United States dollar or any other currency as money, you can just puncture the assertion with the fact that these instruments are not money because they aren’t a store of value over a long period of time.