Throughout the ages, paper has been formed of currency. A lot of people think currency is money. When someone gives you some cash, you presumably think of it as money. It is not. Cash is simply a currency, a medium of exchange that you can use to purchase something that has value, what we would call an asset.
Money, unlike currency, has value within itself. Money is always a currency, in that it can be used to purchase other items that have value. Currency is not always money because it doesn’t have value in and of itself. A hundred-dollar bill doesn’t mean its worth in paper. That paper simply represents value that is stored somewhere else or at least it used to be before our money became currency.
A currency that derives its value from declaratory fiat or an authoritative order of the government is by definition a fiat currency. All currencies in use today are fiat currencies. Societies usually start with high value commodity money such as gold and silver. Gradually, the government hoodwinks the population into accepting fiat currency by issuing paper demand notes that are redeemable in precious metals.
When it comes to inflation or deflation, it is about the expansion or contractions of the currency supply. The symptom of monetary inflation or deflation is rising or falling prices. With inflation everything gets more valuable except currency.
Gold and silver are certainly scarce. Gathered together in one place, all the gold and silver in the world, all the gold and silver in coins, in jewelry, and in works of art, all the gold and silver in banks and in government vaults could be consolidated into a cube a mere thirty-three yards on the side.
Gold and silver are universally desirable. They are recognized and prized everywhere around the globe and have been for centuries. Gold and silver’s desirability are so universal that they would be easier to specify those who don’t recognize their unique allure and function. Prominent among those are certain politicians and economists whose influence has been out of proportion to their insight.
Gold and silver are fungible. They are an atomic element, just one of slightly more than 100 basic forms of matter, with an atomic weight on the periodic table of elements. Each ounce of gold and silver refined to its pure form.
Gold and silver are divisible. They are so divisible and easily worked that they have been prized by artisans and craftsmen, ancient and modern. Gold and silver lead all metals in malleability and ductility.