Money is A Current, It Flows.
Verb:(esp. of a liquid) Move along or out steadily and continuously in a current or stream
Noun:The action or fact of moving along in a steady, continuous stream.
Have you ever wondered why money is referred to as currency? Does it bother you what the word cashflow means? If it does, relax. You are not alone. There are probably hundreds of people who don’t either. This is why I have written this article. Just because of YOU. Enjoy.
In the year 1971, the rules of money changed. Thereby changing its flow. Money stopped being static and became a current. This is why you often hear the word CURRENCY. Like in physics, the word current means movement. Thus a current needs to keep moving. If it stops it loses its value. The reason why light ceases in your house is because the electric current stopped moving and it lost it value.
Who Changed The Rules of Money?
Prior to 1971, the worlds monetary system was backed by gold. This means, if you held $100, you are actually holding its equivalent in Gold and the $100 could be exchanged for its worth in Gold. However in 1971, President Nixon ended the convertibility of the dollar to gold.
President Nixon decided to change the rules because of high inflation rates in the Uncle Sam at that time and since then, money as we know it ceased to be the same. It began to lose its value as majority could not keep up with its pace.
What Does This mean To You?
Since you now know that money is a current, hence the word currency, you need to understand its flow and how to use it to your advantage.
A currency must keep moving in order to keep its value. This is why saving money [for looooong ] is somehow an absurd idea. I have nothing against having a savings but saving should have a purpose. Saving money indefinitely is like parking your currency. It losses its value. Imagine saving a $1000 at 3% p.a while the inflation rate is 7% p.a. This means by the time you’d want to make use of your money, you’d realize that your $1000 is about $500 in real worth.
How Do You Use The Flow of Money to Your Advantage?
The idea is to direct the flow of your money/currency to move from assets to assets as fast as possible. There are two ways to this:
1. Acquire assets that are appreciating in value e.g., gold, oil, land, real estate, stocks, silver etc.
2. Acquire assets that produce [good] cashflow e.g. profitable business ventures.
Doing this will ensure that your money is not just tied down in a savings account but it is moving as a current is supposed to.
It will ensure that your money is not under yielding at 3% p.a when it could be yielding at least, 50 % p.a in a well managed, profitable business.
Do you think money is liquid and its flow can be directed at will? Please use the comment box below to share your views. Thanks.
You can also join the conversation on twitter by following ~ @phemyte.