Many of us never learned this in business school, but understanding the three primary functions of money is essential:
1. Medium of Exchange
2. Unit of Account
3. Store of Value
Focusing on the third function, the 'Store of Value,' is particularly important. Money should be able to be saved and retrieved later while maintaining its value over time, enabling its use in future transactions. This is one reason why gold has served as a form of money for over 5,000 years.
In contrast, fiat money struggles with this third function. The built-in inflation is not merely a flaw; it is a necessary aspect of its debt-based system. As a result, people find themselves working for money that does not effectively serve as a store of value, prompting them to seek alternatives.
When Nixon abandoned the #gold standard in 1971, we witnessed a massive surge in asset price inflation. This shift occurred because individuals were trying to protect their purchasing power—essentially their life energy—by investing in alternatives like stocks, real estate and surprisingly in watches.
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