Editing Store of value (section)

==Money as a store of value==
[[File:Currency, Money,before Euro.jpg|thumb|Various bills and coins]]
[[Monetary economics]] is the branch of economics which analyses the functions of money. Storage of value is one of the three generally accepted [[Money#Functions|functions of money]].<ref name="esoec">{{cite book |title=Essentials of Economics |last=Mankiw |first=N. Gregory |year=2012 |publisher=Cengage Learning |isbn=978-1133418948 |page=437 |url=https://books.google.com/books?id=sSY9AAAAQBAJ |accessdate=2 January 2017}}</ref>  The other functions are the [[medium of exchange]], which is used as an intermediary to avoid the inconveniences of the [[coincidence of wants]], and the [[unit of account]], which allows the value of various goods, services, assets and liabilities to be rendered in multiples of the same unit. Money is well-suited to storing value because of its [[purchasing power]].<ref name="papc">{{cite book |title=Economics: Private and Public Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580181 |page=264 |url=https://books.google.com/books?id=yIbH4R77OtMC |accessdate=2 January 2017}}</ref>  It is also useful because of its durability.<ref name="funofec">{{cite book |title=Fundamentals of Economics |last=Boyes |first=William |author2=Michael Melvin |year=2011 |publisher=Cengage Learning |isbn=978-1133172994 |page=295 |url=https://books.google.com/books?id=qe08AAAAQBAJ |accessdate=3 January 2017}}</ref>

Because of its function as a store of value, large quantities of money are [[Hoarding (economics)|hoarded]].<ref name="primon">{{cite book |title=Primitive Money: In its Ethnological, Historical and Economic Aspects, Edition 2 |last=Einzig |first=Paul |year=2014 |publisher=Elsevier |isbn=9781483157153 |page=425 |url=https://play.google.com/store/books/details?id=RhejBQAAQBAJ |accessdate=3 January 2017}}</ref>  Money's usefulness as a store of value declines if there are significant changes in the general level of [[price]]s.<ref name="mea">{{cite book |title=Macro Economic Analysis |last=Currie |first=David A. |year=1981 |publisher=Nirali Prakashan |isbn=9380064195 |page=2.14 |url=https://books.google.com/books?id=01G0yTCZpB4C |accessdate=3 January 2017}}</ref>  So if inflation rises, purchasing power declines and a cost is placed on those holding money.<ref name="mpap">{{cite book |title=Macroeconomics: Public and Private Choice |last=Gwartney |first=James |author2=Richard Stroup |author3=Russell Sobel |author4=David Macpherson |year=2008 |publisher=Cengage Learning |isbn=978-0324580198 |page=264 |url=https://books.google.com/books?id=Byk5B7BJkr4C |accessdate=3 January 2017}}</ref>

Workers who are paid in a currency which is experiencing high [[inflation]] will prefer to spend their income quickly instead of [[saving]] it.<ref name="funofec"/>  When a currency loses its store of value, or more accurately when a currency is perceived to lose its future purchasing power, it fails to function as money.  This causes people to use currencies from other countries as a [[Currency substitution|substitute]].<ref name="funofec"/>

According to the Cambridge cash-balance theory, which is represented by the [[Cambridge equation]], money's ability to store value is more important than its function as a [[medium of exchange]].<ref name="ecam">{{cite book |title=Economic Concepts and Methods |date=2008 |publisher=FK Publications |isbn=978-8188597185 |page=297 |url=https://books.google.com/books?id=DyrqBToCDgQC |accessdate=4 January 2017 }}{{Dead link|date=May 2024 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>  Cambridge claims that the [[demand for money]] is derived from its ability to store value.  This is contrary to [[Irving Fisher|Fisher]] economists' belief that demand arises because money is needed for exchange.<ref name="amtp">{{cite book |title=Advanced Monitory Theory & Policies |last=Reddy |first=R. Jayaprakash |year=2004 |publisher=APH Publishing |isbn=8176486124 |page=50 |url=https://books.google.com/books?id=qem_6XaNkF4C |accessdate=4 January 2017}}</ref>

While most money can be hoarded, [[demurrage money]] is a type of money which is deliberately designed to not be used as a store of value.