Article: What s Your Money Worth? Q: When is a dollar not really a dollar? A: Always.

A kilometre is a thousand metres no matter where in the world you are: Practically all forms of measurement in our daily lives are universally consistent. That is, a kilometre won t suddenly be 563 metres because it s Sunday, or because the year is 2012. This is understandable and stable. Money on the other hand is wild, a rough riding troublemaker changing by the whims of speculation. While a loonie has always had $1 printed on it, it has rarely been equal to or remotely close to a dollar in value. Not only does the value of a dollar change moment by moment, with computers in banks automatically buying and selling currencies within fractions of a second; but inflation means that it just won t buy what it used to. To describe inflation in an accessible way, one may start like this: Let s say you want to buy a carton of milk, which costs $3 one particular day; you d give the cashier $3 and walk out. Now hypothetically the next day our dollar experiences 100% inflation, you d find that an identical carton of milk from the same store is $6, what gives? A carton of milk is worth, well, a carton of milk, that hasn t changed, in fact the price has actually remained the same; it s your loonie that is now worth half of what it was yesterday. A common practice among large-scale employers is to take advantage of inflation: So what would you rather have, a 2% pay cut or a 1% pay raise during our current 3% inflation rate? Doesn t matter, they are the same thing. Due to inflation you can apparently receive a pay raise that is in reality effectively a pay cut! Wonder why your budget gets tighter even though you are getting paid more? This is why, you probably won t notice the extra 5 cent price increase on a chocolate bar every two years, but it all adds up eventually. So over time, a greater number of dollars doesn t always mean more money. One must learn to separate face value (printed numbers) from real value (what will it buy) in order to better understand and effectively use cash. And then there s intrinsic value; a leftover from the trade and barter system, the idea that your money is actually worth something even if it didn t have the face of the Queen of England on it. Now credit cards, debit, checks, and paper money have no intrinsic value, the paper they re printed on isn t worth much on its own. Actually none of this is actually money: Bills are really promissory bank notes (Think: IOU), checks are values created out of thin air based on bank reserves (Think: IOU collect elsewhere), and computerized currency is valueless on its own (Think: IOU one IOU). But there is one very important factor: Coinage, the oldest symbolic measure of money. Ahh yes, the last bastion of intrinsic value is the mineral disk, right? Guess what? Nope. A dime from before 1920 used to be 2.3 grams of 92.5% silver, worth about $2 today just in mineral value. By mid-1967 they were 50% silver and half copper. By the year 1999 dimes were minted out of 99.9% nickel, and finally 2000 to today... The dime, cent, nickel, and quarter are actually all now over 92% steel and merely plated to look valuable, because it s cheaper than zinc. We re left now with dimes that are worth approximately 1/2th of a cent. Sure they re worth something, but barely 1/20th of what they are presented as. This is systematically hidden inflation, and it s not a good thing for us.

Resources: Towers of Gold, Feet of Clay: The Canadian Banks By Walter Stewart: Journalist Publisher: HarperCollins Canada / Not Applicable; 1st edition (Sep 1 1982) Language: English ISBN-10: 0002170248 ISBN-13: 978-0002170246 http://www.coinflation.com/canada/ http://www.coinsandcanada.com/coins-prices.php http://en.wikipedia.org/wiki/Nickel_%28Canadian_coin%29 http://en.wikipedia.org/wiki/Dime_%28Canadian_coin%29 http://en.wikipedia.org/wiki/Cent_%28Canadian_coin%29 http://en.wikipedia.org/wiki/Quarter_%28Canadian_coin%29 http://en.wikipedia.org/wiki/Loonie http://en.wikipedia.org/wiki/Inflation www.mint.ca/ www.metalprices.com/ - The London Metal Exchange