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Saturday, March 6, 2010

Manage Your Money Based on Its Functions

In economic theory, money has three functions: as a Medium of Exchange, a Store of Value and a Unit of Account.  These three functions should be attached to the money that we use, but the use of paper money it can not fulfill these three functions at once. Paper money only serves as a tool optimally Medium of Exchange or Exchange. As a Store of Value, its value eroded by inflation over time. Because of rapidly declining in value is the paper money can not consistently used as a Unit of Account. If you have a house that you bought 10 years ago worth USD 400 million; without renovation even now worth over USD 1 billion you really lucky? where's the point? This apparent advantage occurs because the bias unit of account you use.

Money Gold / Silver Dinar or / Dirham actually thousands of years of history can play the three functions of money perfectly. However, due to the regime last 85 years using only paper money - and even last through 27 years of prohibiting the use of IMF gold as a reference currency; the Gold / Dinar and Silver / Dirham we can not enable it as money in the sense Tool Swap or Medium of Exchange optimally.

In terms of money, we are living in this era faced a dilemma situation. We are the official currency is Euro, Dollar etc.. we can effectively use as a medium of exchange at the moment, but this paper money can not play the function of Store of Value and Unit of Account. Paper money effectively only played 1 of the three functions of money.
On the other hand we also have the Dinar and Dirham money that have been proven to effectively portray the three functions; but not legally recognized as a Tool Swap or Medium of Exchange. Practical new dinar and dirham could play 2 of the three functions of money. So where do we use?. Depending on our needs!. 

Composition and dinar banknotes will depend how much you need as a Tool Swap and how many were needed as a Store of Value. The simple principle, as seen in the graph above terbut, the closer the use of your money - the greater the Medium of Exchange functions play a role. The further usage of the functionality  Store of Value was needed. 

For sale now, we need the money the paper - it is not advisable to change money this paper by Dinar - if the money would you need in the near future. Contrary to your long-term needs such as college expenses of children, health care costs the old days, the cost of going pilgrimage etc.. You need money to function effectively as a Store of Value - Dinar is the practical answer. 

Actually there is another answer better; your money is not only effective As with the Store of Value, but also the Growing Assets - if you can invest in the real sector as well. In this 'money' long-term you can be an oak tree that continues to grow, the children growing cattle, chickens and ducks are more and more, the gardens are more verdant ...

ref: www.geraidinar.com

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