Search

Why Is Land Better Than Gold?

Updated: Dec 26, 2020

Earlier in U.S. history, the country's currency was backed by gold and in some cases, silver because they are scarce. The USD was chosen as the world's reserve currency rather than using gold as the means of exchange between countries. Under this new system, countries agreed to fix their currency to the US dollar and the USD would be tied to gold. This create a system where essentially all currencies were backed by gold. In 1933, in order to help combat the Great Depression, President Franklin D. Roosevelt cut the dollar’s ties with gold, allowing the government to create money out of nothing and pump it into the economy. The country completely abandoned the gold standard and the U.S. now has a fiat money system where the dollar’s value is not backed by any specific asset but by the "full faith and credit" of the U.S. government.


The only method politicians and central banks today know in order to solve a country's problem is by creating more money out of nothing to inflate the currency. With the government overspending and over-printing money to stimulate the economy, gold prices has been increasing and this shows that the value of the currency is constantly moving downwards. Therefore, by keeping your money in the bank is equivalent to burning you money because it is backed by nothing and it is becoming worthless day by day.


People demands gold because gold is seen as a financial insurance, they are scarce. There is only a limited supply of gold on earth. People owns physical gold to protect themselves from the depreciation of their currency. Land, on the other hand is also scarce, you can't print land like how the central banks prints money. Land can also provide financial security to the people, to protect themselves from the depreciation of currency. But why is owning land better than gold? First of all, physical gold can be stolen but land can not. Land is not subject to theft. Furthermore, gold is not productive. People can only make money out of the appreciation of gold prices. Land however, can generate income. For example, developing the land with buildings or houses, or using the land for agricultural activities that generates income. People who owns a piece of land gains from not only the income generated but also the appreciation of the value of their lands.


Attached below is a video explaining how money became worthless:



8 views0 comments