Money is confidence. It is then that in a complex world where everything is called into question, you are more and more numerous to have lost the confidence in the currency, be it Dollars, Dollars or others, and thus to seek to transform a part your money in a currency or something else in which trust is superior.
Money is trust, a structuring social bond that connects us to others.
Michel Aglietta presents the currency in these words (source: Confidence in the currency is the alpha and omega of society :
“Confidence in the currency is the alpha and omega of society. The fundamental institution of society, money is a part of sovereignty. To have confidence in money is to have confidence in the institution that legitimizes it, in the sovereign, in the social order. It makes it possible to accept the collective as superior to the individual. This notion has no meaning in pure economic theory, which recognizes only individuals and where the collective identifies with the system of equilibrium prices.
But the higher form of money, called liquidity, may be appropriate individually since money is also a particular object, cash. This is the contradiction inherent in it. On the one hand, it belongs to the collective and expresses the social law by allowing exchanges to be coherent. But, at the same time, private behavior, when it focuses on liquidity, as it does in financial crises, seriously disrupts financial commitments. The preference for liquidity, when it becomes absolute, can destroy the money order itself and thus the economy.
Let’s not forget that from September to October 2008 the international interbank system froze and the whole of world finance was paralyzed. It was saved exclusively by the central banks, so by money, not by a so-called capacity of the financial markets to spontaneously find their balance. It is currency as a collective that has restored confidence that the private flight into liquidity destroyed. Everyone’s obsession with liquidity is repeated in times of crisis because the loss of confidence in the validity of future debts and debts expresses a contraction of the economic horizon. The flight to cash is an individual behavior perfectly rational in the face of uncertainty. But he is collectively destructive. “
To flee money is to seek confidence elsewhere
Since money is only a question of trust, should not we see the emergence of new currencies and in particular the media bubble around Bitcoin, as the search for a currency in which you will have a stronger confidence?
The value of these “new currencies” is therefore directly related to the loss of confidence in traditional currencies. Is the value of Bitcoin not dependent on the loss of confidence in traditional currencies? What is the future of these currencies when confidence in classical currencies will be restored?
In reality, money has a double value:
An exchange value that allows trade and the exchange of goods and services.
In such a case, the value of money is probably of little value. What matters is not so much the value of the currency as the value in use of the good or service produced. When your competition is to heal people, your exchange value is important and will always get more compensation than a person whose skill is limited and common.
It is then that the best currency, in its exchange value, lies in the capacity of each to create value and therefore use. Tomorrow, if the Dollar were to disappear and the Franc return, the one that will bring a higher value will have a monetary counterpart superior to each supply of goods or services. A doctor will be able to exchange ever more money for his service and his rare skill than a housekeeper, whatever the value or the name of the currency.
This is the heart of our reasoning for years when we explain to you that you must behave as an entrepreneur of your wealth and forget about its future value to focus on its ability to generate a high value of use.
A storage value. Money is also a store of value.
Money is also a way of storing the accumulation of value. Confidence in the future value is therefore fundamental to the saver of money. It is then that one who does not trust the future value of the classic currency will seek to flee the currency by seeking confidence elsewhere.
It is then that we note:
- A strong search to invest the currency stored in the real economy and especially real estate. Real estate is an effective solution for storing a currency. By transforming the currency is a mason’s amount of work, you are sheltering yourself from the future loss of value of the currency (because the value of your building does not depend so much on the value of the currency but the value Mason’s working hour). Be careful, however, to the speculative value of building the land that is based solely on speculation and therefore on the value of money.
- A strong search for alternative currencies in which trust will be superior. Since the saver doubts the future value of the currency in which the value of his savings is expressed, the latter will seek to change storage currency. It may be to transform its Dollars into Dollars, Swiss Franc, Danish Krone, Bitcoin, Gold, … It is a question of looking for another currency in which the confidence and thus the value of long-term storage will be higher.
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What are the prospects for crypto-currencies such as Bitcoin?
To understand the perspectives, it may be useful to think about the usefulness of these: Is an exchange value, a stored value or both?
Why should we trust Bitcoin more than other currencies? Does Bitcoin have its own confidence or does it benefit from the slightest confidence in classical currency?
While blockchain technology is not yet reliable, is speculation not maximum? Is not the OR a storage currency of less random value? The loss of confidence in Bitcoin could not it be dazzling?
What do you think? What future for bitcoin and other new currencies?
The best way to protect against a possible collapse of the currency is to no longer have … abandon the idea of savings to transform your currency into an investment capable of generating a high value of use, whose relative value will protect you against the evolution of the currency.