Six Characteristics of "Good Money"

Written by Swiss America

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"It's an unfortunate historical anomaly that people think about the paper in their wallets as money. The dollar is, technically, a currency. A currency is a government substitute for money. But gold is money....

There's nothing magical about gold. It's just uniquely well-suited among the 92 naturally occurring elements for use as money…in the same way aluminum is good for airplanes or uranium is good for nuclear power....What are the characteristics of a good money? Aristotle listed them in the 4th century BCE. A good money must be all of the following: 1. Durable: A good money shouldn't fall apart in your pocket nor evaporate when you aren't looking. It should be indestructible....2. Divisible: A good money needs to be convertible into larger and smaller pieces without losing its value, to fit a transaction of any size....3. Consistent: A good money is something that always looks the same, so that it's easy to recognize, each piece identical to the next....4. Convenient: A good money packs a lot of value into a small package and is highly portable....5. Intrinsically valuable: A good money is something many people want or can use....Actually, there's a sixth reason Aristotle should have mentioned, but it wasn’t relevant in his age, because nobody would have thought of it… 6. It can't be created out of thin air....If you try to make airplanes out of lead, or money out of paper, you're in for a crash. That gold is money is simply the result of the market process, seeking optimum means of storing value and making exchanges."