I shall boldly state that: Hoarded Money has no value. Although this may seem to be a silly statement, consider my reasoning: When Hoarded Money is converted to Circulating Money, it dilutes the pool of Circulating Money. Thus, Hoarded Money only has value when brought back into circulation, if a similar amount of Circulating Money is turned into Hoarded Money or a similar amount of Circulating Money is removed from circulation. In the limit, a huge resumption of Hoarded Money will destroy the value of all money and may even destroy the money system. Scary will be the day that all the money in tax havens gets churned into the real economy. All money will be destroyed. At a velocity of 1, 92% of the money is hoarded. Catastrophe awaits.

Hoarded Money has no value as any spending of Hoarded Money requires an equal amount of Circulating Money to be hoarded. Any major movement of Hoarded Money will destroy the value of all money. A big movement of money from hoarding will cause the value of all money to collapse, not just in proportion, but by total failure.

The Hoarded Money has potentially no value. Hoarded Money only has value if equal quantities of Circulating Money are converted to Hoarded Money at the same time. (Or Circulating Money is pulled out circulation at a similar rate.) Thus, we can say that “Hoarded Money has no value” and “money is not a store of value”.

Hoarded Money should not be considered a store of value. The current definition of money states that money can be a store of value. But this is incorrect.

When someone hoards some money, the Circulating Money decreases and the issuing authority needs to augment the Money Supply with an equal amount of new money. The reverse is also an issue. When the Hoarded Money is spent back into circulation, it increases the Circulating Money, causing an inflationary event. In small quantities, this can be absorbed, in larger quantities, the inflationary event becomes more apparent and is much like the classic ‘printing money’ conversation. The only way to counter the inflationary event is for someone else to convert an equal amount of Circulating Money to Hoarded Money or for the money authority to remove an equal quantity of Circulating Money from circulation. When considered as a whole, Hoarded Money clearly cannot all be converted back to Circulating Money. To do so would crash the economy. What is interesting here is that the very people that put great store on the value of their hoards, actually destroy their hoards in so doing. A poor man is not going to worry whether money is horribly devalued provided his income feeds his family. It is the hoarders that gnash their teeth over every minor adjustment in the financial landscape. The hoarders spend much of their waking hours fretting over exchange rates and indexes without realising it is all a virtual mountain of no value. It is less valuable than a puff of wind. At least a puff of wind allows life.

When hoarders decide to spend their Hoarded Money, it dilutes the pool of Circulating Money with an outcome of a deflation of values of purchasable goods. Money falls in value compared to goods. The value of money to society lies in its ability to enable commerce through transactions. Hoarded Money prevents these wealth creating transactions and so Hoarded Money has no value to society. However, this chapter was writen to take this logic a stage further and demonstrate that the actual value of the stored money is zero.

Towards the end of the Roman Empire, the society had succumbed to the use of credit for money that did not exist. The collapse caused the credit system to collapse and the Money Supply shrank to one-twentieth as all credit evaporated. Europe descended into the desperate times of Dark Ages and there was a large population reduction, which is a polite wording for starvation. In 1345 the banks in Venice collapsed. They also had been lending money that did not exist. These banks had slowly impoverished the people and exerted control over the finances of nations. The financial collapse weakened the already weak structures in society to the extent that Europe was not able to ward off the plague. Around one-third of the population died from starvation and disease. There is a hint here that Hoarded Money, in the form of credit, simply evaporated. Similar parameters exist today. Never before have we needed a better understanding of the mechanisms of money and its crucial role in the operation of society. Our imperfect money system impoverishes millions and is prone to collapse. Our system has no protection against collapse. Significant in this is the level of Hoarded Money. In the limit, a huge resumption of Hoarded Money will destroy the value of all money and may even destroy the money system. The collapse will involve all the money in tax havens which will be rapidly spent into the real economy. All money will be destroyed.

Citizens need to store wealth in other ways. They can grow trees and enhance their property or business facilities.