about my money

I have this image in my mind, of a time when I was very young. My father, holding a Singapore one dollar note, told me, "This is actually gold. It represents a certain amount of gold in the reserve (maybe he didn't actually use the word reserve lah.. but something to that effect). All our money is backed by gold. Meaning, at anytime, on demand, I can go to the bank with this, and ask for a specific amount of gold."

MasyaAllah - I don't know how come I have that specific memory. It must have been in the 70s. Yes, those good old days, when our local money, was really backed by gold or foreign assets. However, in 1982, convertibility of our local currency notes and coins into gold and other foreign currencies ON DEMAND, was revoked, by the government.

The government decided to go on fiat money. Fiat money means having a piece of metal or paper that is a 'legal tender', meaning it can be used to purchase goods or services, only because the government says it can. The real value of this legal tender is very dependent on the world's confidence towards the issuing government, and on how much of that money, the government decides to distribute/circulate in the market, compared to the availability of goods and services.

What it basically means is that, my money is only worth, what it is worth at this moment. 'Worth' meaning how much goods or services I can buy with the current amount I have now. It's worth, changes daily. Next year, it's definitely worth lesser. This is called inflation - and rises steadily with fiat money. Didn't you notice? 20 years ago, 50c can get me a bowl of mee siam. Now it's$2.50 and rising..

We need to re-think about what it means, to save money for future use. We need to change our perception of what we need. It's not simply money that we need, it's the ability, the power, to purchase goods and services that we would need in the future - that is what is required. So can saving your money just like that, ensure you that you have the same purchasing power, as you do now?

This is the basis of my thoughts, that lead me to agree on getting this current property, 2 years ago. I didn't want to let my CPF money, just sit there, losing it's value. I needed to use it for what it's worth now - to get REAL commodity. Only real commodities, maintain it's real value or appreciates over time, depending on it's availability. Another real commodity I'd invest in, is gold.

p.s. 'Apa hal dekni.. cakap cakap pasal kuih.. pastu suddenly talk about economy?!?!' Reading about the US financial turmoil, triggered these thoughts actually. I feel strongly against fiat money and the role of banks.

I strongly recommend that you read 'What has the government done to your money', by Murray N Rothbard. You can find the pdf format of this book online.. just google it.

Astaghfirullah. It's a world, so full of deceit and pretence. We have to be constantly on our guard, so as not to allow ourselves to get drifted onto the constant waves of deceit, pretence and ignorance that is all around us, everyday of our lives.