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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (66777)7/25/2006 9:12:39 AM
From: Mike Johnston  Read Replies (1) of 110194
 
To me, money is legal tender that is widely accepted for the purchase of goods and services. There is no definition anywhere (that I accept) that says money must be a store of value.

Let's take your assumption that money does not have to be a store of wealth, that it only is a medium of exchange.

However, when money is used as a medium of exchange, there is not only the aspect of exchanging the money for goods and services but there also is a measurement aspect involved.
And the value of the medium used for this measurement must be constant.

If this value is not constant, then the exchange process is compromised, somebody is going to be ripped off.

If i cannot hold the medium of exchange because it loses value rapidly and must exchange it into something if i want to avoid a loss, how good is that medium ?

One should be able to hold the medium of exchange without fear of losing purchasing power, because there is excess amount of that medium being produced.

Something that does not hold its value cannot be an efficient medium of exchange in the long run. So it really turns out that true money should be a store of value to be an efficient medium of exchange.
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