What do you think?  Does Money Have Value?

Sometimes I open my wallet and look at the paper money there within!  While the paper is a lovely shade of green with some very special effects in the print, I have to wonder if it’s really worth it!

I often wonder what would happen if aliens from another planet came down and saw us working away for a few, relatively small, rectangular pieces of paper?  Do you think that they would conclude that we aren’t the smartest animal on earth…  Perhaps they would give up on us and try to communicate with the dolphins instead?

Money has had different forms throughout the ages ranging from shells to such things as ancient metal knives (in china) and even stones!

The thing about paper money is that it has no intrinsic value!  The only way it has value is if a group or society believes that it has value, and are willing to trade other things (such a labor) for the belief of the value in that paper money.

At one time in the past, many countries backed up their paper currency with precious metals.  For example, in the United States, at one time in the not to long ago past, each dollar had a certain amount of gold locked away in a safe that was reserved to represent the money.

So at one time, paper money did have value, but the gold standard has been given up (in 1971), and now the money floats.  Now paper has nothing backing it up other than an a believe that it has value (and it does).

Even though I’m not currently buying gold, if something were to happen to my country, my paper money would become worthless (see the confederate currency for a great example).  However if I did own gold, even if something were to happen to make my countriy’s currency practically worthless, gold would still have value!

So tell me, what do you think, does money have value?  Do you think it would be worth it to diversify your investment portfolio by owning some precious metals?  Maybe 10%, or more?

-MR

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