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Depreciation Of Money Virtually: In the late 1960's, much was made of the part played by speculation in a worldwide increase in the price of gold. Speculation, of course, was a factor, but the real causes were the prolonged weakness of the pound sterling, the seemingly intractable U. S. balance-of-payments deficit, and the persistent depreciation of money virtually everywhere.Similarly, the amount of depreciation charged against income is affected by management estimates and assumptions. The useful life over which the plant or equipment will be written off is an estimate, and one of several acceptable methods of calculating depreciation must be selected.
The preference for gold basically reflects the deeply anchored views of those responsible for a nation's monetary reserves that there are times and circumstances in which no other money will do, because gold alone is universally acceptable and anonymous and because it has an intrinsic value. These views also reflect the desire to protect reserves against the hazards of depreciation. |
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