Money is a medium for exchange for goods and services, not a repository of wealth. There are economic advantages for it being unstable. It is both the fuel of the economy and the pressure relief valve.
People have the warped vision of wealth being Scrooge McDuck sitting in the vault on sacks of money. That is not the way it works. Money is only useful when it is being used. The instability is an incentive to not just stack it up. That benefits no one and stagnates the economy. The idea is to use it, either to buy goods and services or invest it.
In the most conservative investment, putting it in a savings account, it is still being used. You put the money in an account where it can be loaned out to people who want to buy things. The interest you get is payment for that investment. The risk that you take is minimal but the returns are minimal as well. The advantage is liquidity. You can take it out at a moment's notice with no penalty. Take a little more risk of missing opportunities to invest it elsewhere at a better rate of return, you can make a deal to leave it in for a longer period of time such as a CD, Bond, or a Treasury note for some fixed time period. You can invest in other assets such as a home, percentage of a business, your own business, or even other currencies or commodities.
Sure you can shuffle it around and make some money through arbitrage, but money is no more an investment than the banana I just ate or the bowl of pennies I have sitting on my desk.
Of course the investment medium you choose puts the onus on you to choose well. It puts more pressure on the people with few assets to protect their wealth but that is as true today as when Jesus said, "The poor you will always have with you” (Mk 14:7) I am sure that it goes back further than that. When people have a choice, there is no guarantee that they will make good ones.
Anytime you spend or invest money, you take the risk that you could have gotten more for the exchange. Anytime you don't spend money, there is the risk that you might not get as good of a deal next time an opportunity presents. Just sitting on it is a risk unto itself.
Money is a medium for exchange for goods and services, not a repository of wealth. There are economic advantages for it being unstable. It is both the fuel of the economy and the pressure relief valve.
People have the warped vision of wealth being Scrooge McDuck sitting in the vault on sacks of money. That is not the way it works. Money is only useful when it is being used. The instability is an incentive to not just stack it up. That benefits no one and stagnates the economy. The idea is to use it, either to buy goods and services or invest it.
In the most conservative investment, putting it in a savings account, it is still being used. You put the money in an account where it can be loaned out to people who want to buy things. The interest you get is payment for that investment. The risk that you take is minimal but the returns are minimal as well. The advantage is liquidity. You can take it out at a moment's notice with no penalty. Take a little more risk of missing opportunities to invest it elsewhere at a better rate of return, you can make a deal to leave it in for a longer period of time such as a CD, Bond, or a Treasury note for some fixed time period. You can invest in other assets such as a home, percentage of a business, your own business, or even other currencies or commodities.
Sure you can shuffle it around and make some money through arbitrage, but money is no more an investment than the banana I just ate or the bowl of pennies I have sitting on my desk.
Of course the investment medium you choose puts the onus on you to choose well. It puts more pressure on the people with few assets to protect their wealth but that is as true today as when Jesus said, "The poor you will always have with you” (Mk 14:7) I am sure that it goes back further than that. When people have a choice, there is no guarantee that they will make good ones.
Anytime you spend or invest money, you take the risk that you could have gotten more for the exchange. Anytime you don't spend money, there is the risk that you might not get as good of a deal next time an opportunity presents. Just sitting on it is a risk unto itself.