The value of money !

Money is something we take for granted. It has the value to buy the things we need, but we rarely question how it fits in to the world monetary system.

Each country's money exchanges at a different rate. When we cross a national border and need to exchange cash we either get more or less, depending on the exchange rate at that time.

The exchange rate varies according to how well each country is performing in trade - whether it has a budget surplus or a deficit - and how confident the international community views it's future prospects.

Decades ago the better currencies were backed by the " Gold Standard ". For every dollar, pound or peso in circulation there was supposed to be gold held in a depository to match that amount.

When this " Gold Standard " was abandoned the value of a country's currency became a matter of trust. Two world leaders stood out and became the preferred currency in which to conduct world trade - those currencies were the British pound and the American dollar.

It is therefore a matter of great concern to many people to find that both countries are now printing money and putting this in circulation in an attempt to reflate the liquidity of their banks - and to get their economies moving.

Printing money to resolve a deficit was once seen as the last gamble of a failing regime. It generally preceded the collapse of that regime's hold on power - and was the prelude to the currency becoming a pariah - and becoming rejected as internationally negotiable.

It was an action associated with banana republics or failing dictators.

This action by the British and American treasuries should ring warning bells world wide. A surplus of cash from the printing press will devalue those currencies and lead to rampant inflation.

Inevitably, if the inflationary bear roars into ascendancy assets such as superannuation will lose value and the value of savings will diminish.

The winds of change ore blowing - and the next time we look in our wallets we may find that our purchasing power has been sadly eroded !