4 ms·
The assumption that purpose of (non-crypto) currency (fiat or not, that's beside the point) is to store value (rather than facilitate exchange) is wrong. It's
by js8 5y ago
The assumption that purpose of (non-crypto) currency (fiat or not, that's beside the point) is to store value (rather than facilitate exchange) is wrong.
It's basically wishful thinking. You cannot really "store" economic value without maintaining the productive capacity needed to counter its depreciation (due to laws of thermodynamics). As an extreme example, you cannot buy bread for 10 years today, keep it and then just eat it. Instead, you need "access" to a bakery and a wheat plantation.
So the value is really stored in the functioning society, which maintains the production capacity. (And thus society is what you have to care about, to libertarians' dismay.) Money (currency) is just a convenient abstraction, an accounting trick, to keep track of one's share of the society's productive capacity.
As an aside, if the production capacity of society decreases (e.g. due to war, or natural disaster, or underinvestment during COVID), you get an inflation because suddenly sum of all accounts (money) is greater than the total production capacity, and so your share in economy, expressed in your savings, also shrinks (in absolute terms).