Quote from: K-Dog on Jan 24, 2024, 02:19 AMThe purpose of money is be to a constant storehouse of value, and I contend that capitalism is contradictory to maintaining a constant storehouse of value.
People WISH money could be a constant store of value, but it can never be that because what it buys is not constant in its supply or in the demand for it. Even Gold is not a constant source of value. If there is plenty of food around, 1 oz of gold will buy a whole lot of it. If there is little food available and you have nothing to eat, it could take your whole oz of gold to buy a Twinkie. If there are lots of empty houses like in Legrad in Croatia, you can buy one for a dollar. If there are none around in Islip Long Island, same house goes for $600K. Conditions change, and the value of money changes with them.
The total money supply also cchanges its value. Gold was very valued in Spain in 1500, then they took tons of it from Montezuma. When the ships brought it back to Spain, it took a whole lot more gold to buy a title from the King. You might have been saving your gold your whole life to buy your title, but now the King didn't need your gold anymore. Its value had changed due to the new supply.
Money is a physical representation of an accounting system. The amount of it in circulation can change under many circumstances, particularly if the token used to represent the numbers is easy to produce, like paper money or digibits. In a rapidly growing economy with a high velocity of money moving around in transactions, you need a lot of money in circulation. A shortage of money in this situation makes the value of the monney increase. People hoarding money in savings accounts will reduce the supply available and raise its value. Banks making more loans will lower the value of money.
The system is always in a dynamic state of flux no matter what token is used to represent the accounting. In theory, trading bourses establish the value of money and all other commodities at any given point in time, but these can be and are manipulated by people who either have large amounts of money or have access to large lines of credit. They can push the value of anything money will buy up or down, so the money you have will buy more or less of it.
Because money changes all the time in what it will buy, really rich people don't keep all that much of it around. They use the money to buy assets which they think will grow in value, or at least hold value. Real Estate has been a traditional asset to hold, but it can crash in value also when the velocity of money decreases enough and people who have large holdings need to liquidate them.
This is the reality, wishing money would be a constant doesn't make it so.
RE