The first reason why money can increase in value is that it is a form of capital, which can be used as capital to invest in the production and operation of enterprises. After a period of capital circulation, profits will be generated.
This profit is the appreciation of the currency. Therefore, if money does not participate in production and operation, but is hidden on an island like a pirate's treasure, it will obviously not increase in value. ?
Extended data:
Currency devaluation can be understood from different angles.
Domestically, currency devaluation under the metal currency system refers to measures to reduce the legal metal content of domestic currency and its price to metals, thus reducing the value of domestic currency;
Currency devaluation under the modern paper currency system refers to the decline in the value of paper currency (that is, currency inflation) when the number of paper currency in circulation exceeds the required currency demand.
Internationally, the value of money is manifested in the ability to exchange with foreign currency, which is embodied in the change of exchange rate. At this time, currency devaluation means that the ability of a unit's domestic currency to exchange foreign currency decreases, while the foreign exchange rate of its domestic currency decreases. For example, if US$ 65,438+000 is exchanged for 300 yuan RMB last year and 400 yuan RMB this year, the RMB will depreciate.
The devaluation of the currency has led to an increase in prices in China. However, under certain conditions, currency depreciation can stimulate production, reduce the price of domestic goods abroad, and help expand exports and reduce imports. Therefore, after the Second World War, many countries used it as a means to fight against the economic crisis and stimulate economic development.
The specific performance is as follows:
(1) export is restricted. When one country's currency appreciates, relatively speaking, when other countries' currencies depreciate, export profits will decrease. In this case, exporters may reduce their exports to some extent.
(2) A certain amount of foreign exchange "goes up in smoke". When one country's currency appreciates, other countries' currencies depreciate. In this way, the foreign exchange earned before is not so valuable.
For example, the previous US dollar was: US$ 65,438 +0 =8 yuan RMB; If $65,438 +0 =6 yuan RMB, the 800 billion RMB earned before will become 600 billion RMB. Even though the amount of money is still 800 billion, its value has declined. In this way, out of every 800 billion RMB, 200 billion RMB will "vanish" and "disappear out of thin air".
If it is "currency devaluation", the performance is the opposite. In fact, currency appreciation or depreciation is usually not a good thing. As mentioned above, a large change in the currency exchange rate (the extent of currency appreciation or depreciation) may cause a certain degree of "chaos" to the macro economy. Therefore, under normal circumstances, most countries try to keep their currency exchange rates stable.