Are currency and money the same thing? Many people use the terms interchangeably. It helps to understand the difference between the two. Money is a long-term store of value. Gold and Silver have long served as Money. Currencies come and go, but Money continues on as a recognized store of value, even when a currency becomes worthless.
Currency is a medium of exchange, a unit of account, and it is fungible and divisible. Your dollar bills are currency. But a currency derives value from something else as the currency itself has no intrinsic value. The US Dollar bills are not valuable in and of themselves. The paper they are printed on is basically worthless.
People own physical gold and silver as a long-term store of wealth. This is especially true when an economy goes through a difficult period. When you want to insure wealth through long periods where financial upheaval is a real concern, a holding in physical gold or silver is an often chosen investment. One very nice financial vehicle for holding gold and silver over the long-term is a self-directed Gold IRA. There are great tax advantages to using a self-directed IRA to hold physical gold or silver.
There have been periods in history when currency was exchangeable for US Treasury gold or silver. Those were the periods in history when the US was on a gold standard. The US has not been on a gold standard for many decades. In fact, US Dollars ceased to be convertible into gold from the US Treasury in 1971. The Dollar was no longer backed by gold or convertible to gold from the US Treasury after that date. The US Dollar today is a fiat currency, backed by nothing other than the order of US law which defines the Dollar as legal tender and the confidence of people who use the currency and accept it for payment.
Today, no major currency in the world is backed by gold or silver. All the major currencies are fiat currency, meaning they are legal tender as defined by the state. They are not backed by anything other than the law and the confidence of the public who accepts that currency for transactions. Fiat means “an official order given by someone who has power: an order that must be followed”. It is the force of the state that defines a currency as legal tender.
Money is more than currency. Money is everything currency is and it is also a store of value. Importantly, money has an intrinsic value in itself. It does not depend on something else for its value. Precious metals such as gold and silver have long served as money.
To understand how currency is created in the United States, and most other economies of the world, watch the videos that follow below. Each video explains what money and currency are, and how they are created and managed.
Video 1 – Currency vs. Money
Video 1 – Runtime 25:55
Time 0:00 – What is money? How did money evolve? An historical overview.
Time 4:00 – What is currency? See the characteristics. Currency vs Money.
Time 4:20 – What is money? Everything a currency is plus “A Store of Value”. See the details.
Time 5:15 – Why Gold and Silver?
Time 6:20 – The history of fiat currencies.
Time 8:55 – What is money? The characteristics reviewed.
Time 10:40 – When currency was a note as a claim on gold.
Time 11:05 – The difference between currency and money. A review.
Time 12:50 – We can’t print gold. Gold does not go away.
Time 13:55 – What is inflation? An expansion of currency supply.
Time 15:35 – What is Quantitative Easing? It is currency creation.
Time 17:00 – The coming currency crisis. The growing US Dollar Monetary Base.
Time 19:00 – Exporting Inflation. When the Dollars come home.
Time 20:30 – Rising food prices. Causing global instability.
Time 22:10 – Who does inflation punish?
Time 23:10 – The reaction to inflation. The coming wealth transfer.
Video 2 – How Currencies Develop and Fail
Video 2 – Runtime 30:18
Time 0:00 – A new monetary system. What is coming? Wealth transfer.
Time 3:20 – The history of Gold and Silver as money.
Time 5:00 – How do countries fail? Deficits and debasement.
Time 8:35 – History repeating.
Time 9:15 – The seven stages of money. The pendulum swings. Gold delivers the knock-out blow.
Time 10:45 – Gold does an accounting.
Time 11:40 – Coins become cheap metal. No real value.
Time 13:35 – What does this mean to you? How does it play out?
Time 14:15 – Monetary history in 10 minutes.
Time 15:00 – Real money gives confidence to currency.
Time 15:25 – Gold exchange standard. WWI and WWII.
Time 18:05 – Bretton Woods – The new global monetary system in 1944.
Time 18:45 – The Dollar Standard starts in 1971.
Time 21:25 – The US gold window closes. All world currencies become fiat currencies in 1971.
Time 22:20 – Different world monetary systems every 30 – 40 years.
Time 23:10 – Return to Gold and Silver.
Time 25:30 – The 7 stages of empire – a review.
Time 26:25 – What is gold? Why gold? Gold is money.
Video 3 – The Future for the U.S. Dollar
Video 3 – Runtime 36:01
Time 0:00 – What does a rapidly expanding currency supply cause? Opportunity for those who understand the effects.
Time 5:40 – Status of the Dollar. Oil priced in Dollars. 60% of world reserves.
Time 7:30 – Use of gold with currency. Competition to US Dollar.
Time 8:20 – Dollar standard to gold?
Time 11:30 – The Dollar will fail. When?
Time 12:30 – When do we see a new monetary system? …and wealth transfer?
Time 13:30 – What the Chinese are doing.
Time 15:20 – What happens when the Dollar standard fails? 4 choices.
Time 17:10 – A new monetary system every 30 -40 years.
Time 18:15 – What is a gold standard?
Time 20:20 – Gold price accounts for expanding fiat currency supply.
Time 23:10 – Revolving credit outstanding. The new cash. Credit = Cash.
Time 24:05 – Gold price jumps to account for currency supply.
Time 25:10 – Price of gold to cover currency supply. Over $13k per oz.
Time 26:45 – Price of gold if history repeats in 2015… $26k per oz.
Time 28:20 – Global assets: stocks, bonds, real estate + gold.
Time 29:05 – Death of Dollar standard.
Time 31:00 – Crisis = Opportunity
Time 31:30 – Summary: Loss of Dollar confidence. Change to new system is coming.
Time 33:20 – Safe asset class over time of turmoil = gold.
Recommended Gold Dealer – Regal Assets
Video 4 – How Currency is Created
Video 4 – Runtime 29:34
Time 0:00 – How our currency system works. Most people do not know this.
Time 1:20 – How currency is created.
Time 1:55 – How the politics work. Deficits for spending to get elected.
Time 2:45 – What is a bond auction?
Time 3:30 – Currency is created out of thin air. There is nothing backing up new currency.
Time 4:15 – RECAP of the currency creation process. You should understand this. It is how currency is created.
Time 5:20 – Look at this chart of the Federal Reserves creation of base money (note: it is actually “currency”, not money, that is being created). Massive Dollar growth.
Time 6:15 – How bank deposits create more currency. The effects of fractional reserve lending. Creating more currency.
Time 7:30 – How commercial banks create checkbook money.
Time 9:10 – RECAP. How banks create checkbook currency. Most of the US currency is created this way. Over 90% of the currency comes from this.
Time 9:40 – How currency creation creates inflation.
Time 10:35 – What is true wealth? Your time.
Time 11:25 – RECAP. How the system works. And how it slowly takes money from most people.
Time 12:25 – What is the US debt ceiling?
Time 14:30 – Why we must go deeper into debt each year.
Time 15:20 – Dangers of central banking.
Time 16:20 – What inflation does. It is a stealth tax.
Time 17:10 – What is the Federal Reserve… really? It is privately owned. It pays a dividend of 6% to its owners. It is not a government department or agency.
Time 18:50 – RECAP. The Federal Reserve System. What is really does.
Time 21:25 – The system is designed to enrich the Federal Reserves owners.
Time 22:50 – The banking system creates currency from nothing. US Dollars are backed by nothing more than the confidence of those who accept them in trade, and the Government who by decree defines the Dollar as legal tender. Otherwise, it’s value is near zero.
Note: To learn how the Federal Reserve was created and what it does and for whom refer to this book:
Video 5 – The Crisis of Corrupt Currency and Large Debt
Video 5 – Runtime 29:58
Time 0:00 – What all this debt will cause.
Time 1:10 – History of money and currency. Currency is a question of confidence.
Time 5:10 – Commodity currency.
Time 6:10 – Real money.
Time 8:15 – Gold and Silver as money.
Time 9:35 – Government issued fiat currency.
Time 11:20 – Currency in war. Not redeemable in gold.
Time 14:50 – Currency hyperinflation and broken promises.
Time 16:30 – Loss of freedom.
Time 19:00 – Economic crisis and rise of a dictator.
Time 20:15 – More reliance on government = lower economic performance
Time 21:35 – Where we are today. Massive currency printing.
Time 23:00 – RECAP. How currency is created.
Time 24:20 – All fiat currency eventually goes to zero.
Time 27:20 – Default or inflate – How to get out of debt.