[ARISTOTLE] What is Real Money and Why?
Even Aristotle, the Greek philosopher known as the 'Father of Logic', was completely sure that gold is the best money in the world. And, as many other ancient theories, his premises are still valid today.
Read this article and get to know why gold is real money.
Aristotle listed four characteristics that would define of anything considered as REAL MONEY ✓
- NOT perishable
Let's not be timid in recognizing the obvious: nothing that's perishable makes good money. This is why gold is real money. Gold lasts forever.
- Large value > weight and size
Is its value larger than its weight and size? Like gold? Then, it is synonym to good money!
- Separable & easily distributable
What makes good money can be split into parts and can be easily carried. Unlike artwork, for example. That is why not even a Picasso could be real money.
- Value of itself
Something that makes good money doesn’t obtain its “worth” from something else: it has value of its own. All the world’s current currencies don't make good money because their value is assigned, not intrinsic.
AND WHAT'S MORE
Did you know that most things people consider good investments do not actually make good money? Why? According to the Father of Logic, the key is in portability. Let's see some examples.
NOT REAL MONEY ✘
- Real estate
Impossible to carry around in your pocket. Same if you need to divide it into tiny pieces to pay for, say, a coffee. Can you imagine exchanging a house for cash in a bank? Me neither
Like oil and natural gas. They also lack portability: you cannot carry them around to pay in stores, for instance.
- Stocks and bonds
What's the problem with them? They are paper assets, which means that they don’t have value of its own. It is merely assigned.
Diamonds could be considered a form of money, but you need an expert to determine a their actual value.
You might wonder: how could silver be different from gold? Well, it is not as portable as gold. At current prices, if you want to carry $10,000 around with you, you will need to carry 546 ounces of silver (picture a big, heavy suitcase full of coins). However, $10,000 in gold equal to only 8 ounces, which would fit comfortably in your pocket.
Gold is real money!