Trust issues over paper money: a matter of material?
The value of money is no longer retained by the value of the material. Paper or non-precious metals are used to make money. Governments and the central bank thus guarantee the value of fiat money. We trust institutions to keep the value of money stable through sound monetary policy. Precious metals, such as gold, retain their value better during times of crisis because they are not influenced by monetary policy. The price of gold is not controlled by any central bank. Because gold’s supply is limited, it serves as a safe haven, particularly during economic downturns. Nevertheless, money has become the main form to store of value as it can also be a medium of exchange, contrary to gold. The danger of money is that it can become almost worthless during periods of hyperinflation. Hyperinflation in Germany in 1923 prompted the issuance of bank notes with extremely high denominations. The bank note shown attached to this post is worth 100 billion marks. According to Marx, it is the arbitrary equivalence between our work and money, the value of which is controlled by central banks and the market, that alienates us.
Contributed by Marie-AméliePerez on 28/01/2023
