In the USA, we use Federal Reserve Notes or "dollar bills" not only because their use is imposed on us by force of law, but also because we have a collective memory, built up over generations, of goods' having "always" been exchangeable for these dollars and that, to a reasonable approximation, a certain number of dollars buys a particular amount of some real good or service. Just as the sun has come up every day and dollars have bought things every day, we don't just believe that the sun will come up tomorrow and that dollars will buy things tomorrow: we positively know it.
We "know" it despite the fact that the government erodes the value of our currency a bit every year. (In fact, it has been eroded by 97% since the USA came off the gold standard in 1971, when the dollar became technically worthless, but remained useful as the only means of payment of debt based on pain of imprisonment and the aforementioned memory of generations).
An increasing number of people are coming to understand that our currency has no inherent value. Many also realize that it is not even a fixed measure of value. However, most still believe that the dollar is the best way of measuring of wealth, even if it is shrinking over time as a yardstick. In other words, we generally believe that dollars are to wealth as miles are to distance or pounds are to mass (weight).
But that belief may be an error -- a very important and subtle error that serves those who would exercise power over us and remove our wealth for their political and economic purposes.
Consider the price of gold. Today, it is around $1,500 an ounce. Where does this price come from? We're taught that price is a function of supply and demand. However, the market for gold includes more claimed ounces than there are ounces of physical gold. Therefore, if each person who owns "paper gold," which is a contractual claim on the real thing, actually took delivery of the metal (rather than settling the contract or trade in cash), there would be insufficient gold to settle all of the claims.
In other words, the claims are illusory, and represent illusory supply and illusory demand that set the illusory price of gold in illusory dollars. The same is true for many other markets.
If the size of the market for gold is mostly determined by all the bits of paper that represent claims on gold, rather than the amount of physical gold that anyone really owns, then the question is begged: what is the real value of an ounce of gold? It's certainly not $1,500. And what does "real value" mean anyway?
Currency is strange and unique. Goods become more expensive when the demand for the real value they provide increases. But when currency is in demand, people hoard it, and in so doing choose to forgo some good or service that provides real value (and which they could acquire by spending their currency). In this way, the demand for currency is a kind of inverse of the demand for real value. Moreover, when money is hoarded, the productive economy slows (in the short-term, at least), and less value is created. Currency and value are opposites!
That may seem like playing fast and loose with economic definitions, as well as a semantic sleight of hand, and perhaps it is -- but it is less so than is done every day to maintain our current "belief" in money and our financial system. Challenging our basic economic assumptions -- especially the obvious ones -- is important, because when a crisis hits, it's invariably what everyone is certain of, but is dead wrong about, that kills us.
The certainty that wealth is a number of currency units is very hard for the Western mind to shake. The idea that a man whose goods would sell for a million dollars is necessarily wealthier than one whose goods would sell for ten thousand depends entirely on pricing real, fixed things, like houses and chunks of precious metal, in something that is illusory, changing, and the target of the murky intentions of governments and bankers. It also depends on assigning more "reality" to the illusory measure than to the physical thing that hurts your toe when you kick it. How strange.
Millions of people in other parts of the world are not victims of this cultural prejudice. They have different collective memories. They know, even if unconsciously, that a man who has a million dollars in the bank and nothing else may be wiped out in a flash should hyperinflation take root, or a currency collapse occur, or a central banker change his mind about something, while a man with perhaps only a few gold coins would not only maintain buying power in any such crisis, but would see his practical wealth rise as the currency loses value.
Actually, they wouldn't put it that way. They would say that such a crisis merely reveals the truth that only real things are wealth, and that only some of those real things effectively store value over time. They might venture that apparent "wealth" whose "value" changes with the economic and political climate (like cash in the bank) is not true wealth at all.
This view of the world, largely anathema to the Western mind, provides a practical wisdom: that wealth should be stored in assets that have been proven to fulfill that function over time. But it also provides a more subtle wisdom: that the prevailing means of exchange (currency) need not be the best store of wealth, and the best store of wealth need not be the prevailing means of exchange. Further, one may not be best measured by the other. Bearing in mind that gold has uniquely performed the wealth preservation function throughout history, ponder again the true value of an ounce of gold and the money in your cash account.
People all over the world use currency that is borrowed into existence. In the West, though, we measure wealth almost exclusively in units of that currency. "Money" is created by banks only when someone borrows it. Since it is borrowed at interest, there always exists less money than is owed to the banks that create it, so debt slavery and foreclosure are built into the system. Moreover, this debt-money is devalued when the Fed print more of it for political purposes.
If we were not completely brainwashed, we'd think it absurd that anyone would measure, let alone store, their wealth in such units.
We've built a society on such absurdity. Just as money exists as a claim on a borrower's economic output, government sustains itself by claiming more of the future economic output of the people it supposedly represents.
Fiat currencies fail. If you're one of the woefully few Americans who could lay their hands on an extra $2000 in a month, it may be a good time to consider selling illusion to purchase reality -- in the knowledge that whereas free markets based on sound money can capture the real value of things, rigged markets based only on mental money cannot.