Money: An illusion, A Shadow Of Something Else (II).
By David Cameron Gikandi.
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|That is why a house or a block of shares valued at $1 million today can fall to a valuation of half a million dollars tomorrow when fear is introduced into the hearts of those involved. The fear kills a portion of the internal values of the participants and that is reflected by the paper money, the ‘body’ of value.
Here is something else: physical paper money does not even represent money in full. It cannot reasonably do that. By some estimates (and this varies from nation to nation), only as little as 4% of the money in the banks exists as paper cash. Imagine how much cotton, linen, pulp, and metal the world would need so as to make all the money everyone has in his or her bank accounts.
Imagine how much space it would take to store all this money in paper form. If you were to stack only one million U$1 bills, it would weigh one ton and be 361 ft high. Neither does money exist as gold reserves any more. This is for exactly the same reason we ran out of the reasonable ability to keep a gold standard in the 1970s.
So what does it exist as, the money that we are always talking about? Well, it is one massive illusion. It is all just numbers written on paper and computer storage devices, and assigned to people and entities such as companies and investments, or more accurately, further records!
To put it in another way, for every $100 or its equivalent in any other currency, only about $4 exists as printed-paper notes or coins, while the remaining $96 exists as numbers written on papers and computers in banks and businesses and other entities. The only reason this system does not collapse is that we all believe in it.
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