Store of Value

If I fear I'm losing you
It's just no good
You teasing like you do
--Blondie

Rick Santelli notes a scary quote from Fed head Janet Yellen's recent remarks: "Cash is not a very convenient store of value."



Perhaps so in the eyes of today's central bankers, but not so in terms of healthy financial systems.

Cash (money) is a claim on production. Prior to the advent of money, people traded production directly (barter). Production stored its value completely.

Money was invented to improve the efficiency of trade. The ideal money tracks the value of the goods that it represents on at least a one-to-one basis. As productivity increases, money might even store more value.

Only in a fiat currency world does money lose value.

Quite possibly, the greatest trick central bankers ever pulled was convincing people that money loses value naturally and that falling prices are bad.

Nothing could be further from the truth.