Through the centuries, mankind was trying to find the ideal form of money. One that could store the value over the time and be suitable for use as a medium of exchange and measurement of value.
One of the key problem that has been faced during the search of ideal money is that any commodity used for the accumulation of wealth is subject to depreciation due to a significant increase in the production of this commodity. The only commodity that turned out to be the most suitable for relatively safe storage of wealth turned out to be gold.
Gold was chosen by trial and error. It turned out to be a quite rare substance with unique physical properties that doesn’t allow it to be synthesized on an industrial scale. These properties are a physical barrier that protects gold from a significant increase in its production. The average annual increase in the volume of gold mined in the world is no more than 2.5%, despite the increase in its supply, technical progress and the development of technology. For comparison, silver has many times higher rates of annual increase in total supply, which led to a significant depreciation of it relative to gold over time. These properties are natural restrictions that protect accumulated wealth from depreciation.
Throughout history, rulers exacerbated store of value problem by trying to control money and its emission. They practiced minting coins with a lower content of precious metal, while maintaining the denomination of the coin, thereby profiting from the citizens of their state. After the onset of paper money, banknote printing is practiced, and with the development of computer technology it is sufficient to regulate the banking multiplier parameter in the banking system to increase the money supply. These processes no longer belong to the natural, but are artificially created by those who control the money. There have been periods in history when the monetary value was strictly tied to the weight of gold. During these periods of accumulation were subject to inflation only for natural reasons.Nowadays, all states have switched to totalitarian monetary policy, using paper cash and non-cash money in the form of records in banks' databases. Central banks fully control the money supply, where the cost of increasing the money supply is about zero. Inflationary monetary policy has become the backbone of the economy.
