There are hundreds of different currencies used throughout the globe and throughout time, each serving the same purpose but in a range of different ways. Although in the modern world, it’s undeniable that paper currency reigns supreme.
The reasons behind this are diverse, but there is one key downside to a currency that is created and printed, inflation. The U.S dollar has seen such dramatic inflation over the past 100 years that the modern dollar is equivalent to a mere six cents in the past.
This isn’t to say that some minor inflation is inherently harmful, in fact no inflation whatsoever can be a bad sign for a modern economy. Instead it’s the rate of inflation that raises so many alarms, especially in modern contexts. Following the COVID pandemic the U.S has seen some of the most dramatic inflation rates in its entire history.
In contrast, gold is a physical, tangible, and finite asset. It’s become an investment in the modern day because it’s actual value will stay the same but due to inflation rise with the tide of the dollar. This makes gold a fantastic marker of a poor economic state as it booms when the economy busts.
This contrast between paper currency and gold works to show off the diverse range of ways different currencies can work in modern economies. While paper and theoretical investments like the stock market are booming and taking in high investments, gold drops as a less dynamic asset. As the economy dips and those same intangible assets become too risky, the physical nature of gold causes its value to rise.
The economy now seems to be in a state of inflation, paper currency isn’t valued highly, and gold is continuing to rise. What this will mean for the future is yet to be seen, but modern economies need to know how to find a medium between risky ventures, inflation, and paper currency versus safe markets, stability, and gold. Neither represents enough on its own.