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The Role of Money

Everyone wants money, but there have been particular times in particular countries when no one wanted money, because they considered it worthless. When you can’t buy anything with money, it becomes just useless pieces of paper or useless metal disks. Money is equivalent to wealth for an individual only because other individuals will supply him with the real goods and services that he wants in exchange for his money. But, from the standpoint of the national economy as a whole, money is not wealth. It is just a way to transfer wealth or to give people incentives to produce wealth. Whatever the money consists of, more of it in the national economy means higher prices. Many countries have preferred using gold, silver or some other material that is inherently limited in supply, as money. It is a way of depriving governments of the power to expand the money supply to inflationary levels. Gold has long been considered ideal for this purpose, since there is a limited supply of gold in the worl...