Can your money expire? Would you ever have the idea of withdrawing your money from circulation because of this? Expiry of money in this article means that your money would not be able to buy what you hope it will buy.
What is money? It allows us to exchange goods, and to measure the value of the goods. It is a symbol of wealth and value. A key element of money is that in order to be useful in a society, the majority of people have to believe in the money and honour it as that symbol of wealth. It is a symbol because it is not the wealth itself. You can barter for food and still obtain the food without money, but you cannot eat money instead of food. Looking at the money used today, it hasn't been around that long. It has changed forms many times over the last 200 years. Can you pull out a seashell and go buy milk with it? Not likely. This means that the seashell has expired as money.
What does this mean in modern times? Keep a watchful eye on when your money is not accepted. How do you do this? Look at when the acceptance of money starts to get compromised. The money issued by the central banks is in danger of being redundant. First, barter systems and local currencies are springing up everywhere, which means you don't need "money" to operate within them. (1) (3) (5) Second, gold is re-emerging as a standard of money for governments as well as investors. (3) (8) Third, some governments are talking about use gold as a standard of money again. (6)(7) Fourth, there is growing skepticism about the viability of debt. Do a search on the words "fiscal cliff" and you will understand what is meant by this. Since debt is money today, if there is talk of unsustainable debt, hyperinflation, or currency devaluation, then these are signals that the current form of money is on the chopping block. Fifth, there is growing pessimism about banks. The Europeans are taking money out of banks (2) and many Americans are switching to credit unions (9). Combined with ultra-low interest rates, cash is being forced back into the system, but not creating much value. If there are no good alternatives for investing cash, this could be a disincentive to using it. Lastly, the price of money is really cheap. The price of money is the interest rate since this is the cost of obtaining money if you don't have it. The trend setting interest rate has been at 0% or near there in many countries. If this persists, the supply of money will flood the economy, and if there is no corresponding demand, the value of money will become worthless in the extremes.
What to do if money expires? The simple answer is to treat it like milk - get something new. If you have been using the same brand of milk and it keeps going bad, it may be time to switch brands. If the brand you like does not exist, it is time to consider creating it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.