Currency is a system of money in general use in a particular country, which is widely accepted and circulated, according to the Oxford dictionary.
However the history of the word is more insightful to its inherent meaning, and is derived from Old French corant meaning ‘running, lively, eager, swift,’ the present participle of corre ‘to run,’ and further from Latin currere ‘to run, move quickly’ [of persons or things]. It also historically defined as ‘condition of flowing.’
Understanding the history of the word helps us understand the properties and likely behaviour of money in circulation. An economy only works if money is in constant flow and exchange.
If everyone stored cash under their mattress, there would be less in circulation and flow and velocity of money would decrease.
This can happen in times of deflation, though usually only in relatively small percentages.
If it were extreme we’d end up back to a barter system and whilst in short-term, low percentage volume it would actually increase the value of money, if it were it extreme it would devalue it significantly, because the nature of money is to flow, to transfer energy that isn’t created or destroyed, just exchanged.
For money to work as a system, and for you, it needs to flow. This is why saving, storing and hoarding money will never make you wealthy. Over time the value will erode with inflation, the energy will be latent, and no service or value can be given and exchanged if money stands still.
Money is effectively a carrier or transporter of energy, value, exchange, trade; back and forth and back and forth and back and forth100s and 1,000s of times before it decays or goes out of circulation. This should be an epiphany to many, because it means that one single bank note, lets say an English £50, could be worth £50 multiplied by the amount of times it circulates through the British economy, known in the economy as the velocity of money. The lifespan of a £50 has been estimated at 41 years before they become unfit for circulation.
The imminent polymer notes with increased durability over the current cotton derivative, could last over a century using the Bank of England estimates.
If you get better at sending it back and forth and back and forth, using it for its function to flow and transfer value, exchange and trade in the form of energy, you give it life, let it serve its nature and purpose, and so you are rewarded and remunerated.
I was taught by one of my mentors to tip big and not at the end of the meal but as soon as I walked in the restaurant. At first I was resistant, I didn’t have money to just give away back then, and I wanted good service first, before I decided if and how much to tip. This showed my limited understanding of the laws and nature of money. When I started doing this, I was amazed at observing how kick-starting the initial energy exchange created extra value; more energy in the form of better service, recommendations, referrals and gratitude, and a chain of energy flow that would attract more money to me. It took faith at first, but it is the true nature of money and so the only way to speed up the velocity your way.
Yes, saving money is a part of getting your financial house in order, but as you will learn later, it is one of 6 steps to becoming wealthy, and will not make you wealthy in isolation without the other 5 steps. Savings barely keep up with inflation and you can’t leverage energy transfer and velocity.
Velocity of money is calculated by multiplying the total money supply by how fast the money moves around the economy. This reflects the nature of money and purpose of life, because velocity tends to increase as more money is printed, population increases and supply of total products and services increases. The main aim for virtually all economies across the world is growth.
I believe this renders the arguments that making money is hard and the divide between the rich and the poor is ever increasing as irrelevant points.
Money and energy are moving with increased velocity, and so it should be easier for you to contribute to that energy exchange with increased speed and scale [if you know how]. I call this Your Personal GDP, a section I’m looking forward to sharing with you later
Questions & comments welcome below