Money - Storehouse of Value
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Money - Storehouse of Value

There are many reasons as to why money is preferred as a storehouse of value. Foremost, money is an accepted form of money and an accepted medium. Secondly, the value of money remains more stable when compared to other forms of commodities. Most importantly, it is much easier to store money than to store commodities as happened during the barter system. Storage of money does not need much space and so can be transported easily.

There are many reasons as to why money is preferred as a storehouse of value. Foremost, money is an accepted form of money and an accepted medium. Secondly, the value of money remains more stable when compared to other forms of commodities. Most importantly, it is much easier to store money than to store commodities as happened during the barter system. Storage of money does not need much space and so can be transported easily. In recent times, with the advent of paper money as well as facilities like e-banking, it has become pretty easy to store money. Locker facilities in banks as well as the rate of interest (ROI), provided by banks when money is stored with them, all provides incentives to people to store money and make money act as a store of value.

Saving by storing more money is more secure than by storing through the medium of goods. The ability of money to be stored and yet remain in value (and sometimes even increase in value) over a period of time in exchange is what makes money a store house of value. There are of course, other stores of values. Land, stamps, antique items; they all have their own value. Sometimes, money might not even be the best possible option as its value might depreciate with time. Yet what works in favour of money is that it is more liquid than other forms of stores of value. Easy to be transported and accepted by everyone, money can be used for measurement of value as well. Money also comes in a variety of denominations and can add up as a store house of value more easily.

Keynes also believed that money acts as a store of value. Keynes believed that money performed many other roles apart from functioning as a medium of exchange. Keynes believed that as money was a storehouse of value, with changes in the supply and demand of money, the rate of interest changed too. Keynes believed that other factors remaining constant, the fall in the rate of interest cause a rise in the level of investment made. This is because if there is a fall of investment people would not see it beneficial to keep their savings in bank any more. They would instead love to invest the money they had saved in the bank as they would see better profits emanating out if they invested the money. With investment, the national income would increase. Keynes believed that money played a crucial role in increasing the income, output and level of employment in a country.

Money can be a major power, both socially and emotionally. Money has the power to wreak social and emotional destruction. There can be many uses of money. Along with acting as a store house of value, money acts as a source of credit and purchasing power. With money, transactions are easier to conduct and help people to be self-sufficient. People cannot always make things that they need in order to sustain themselves in their lives and live their lives comfortably. So money proves as a medium of exchange as it promotes division of labor by acting as a storehouse of value. This division of labor happens only because money can act as a storehouse of value.

Money also acts as a great measure of value, along with being a great measure for wealth. What is interesting is that money has in itself, no intrinsic value. It is only acting as a storehouse of value when it is acceptable by others. As you save money, you increase your wealth and your purchasing power.

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