Money

     Money, is often misunderstood.  I'm surprised at this, because it's such an important concept in our lives.  So much of what happens in our lives is influenced by the use of money.  Yet, with this big subject, we setup expectations and conclusions about money that are truly odd.  Following my common style, I looked at common definitions of money, and will summarize what I have found.  

Common descriptions summarized:

• A medium of exchange.
• Assets or property that is owned by a person.  
• A particular object that is accepted as exchange of goods or services. 
• Money is wealth.

    These common definitions don't make very much sense to me, and they have not for a while.  Money can be a medium of exchange, but so can anything else.  Money is not wealth.  Money does not create wealth.  Money does not control wealth.  

    I hope I have created enough confusion, and if this doesn't all make sense, I will start a long explanation, because those are out of style it seems.  Money is rarely described in a way that makes sense.  What money really is, money is a measuring tool.  

    We have lots of systems of measurement, like kilograms and old English pounds are measurement types for weight.  Systems of measurement are very important in a modern world.  Money is just another measurement system like any other, only it's used to measure value during trade.  We trade products, we trade peoples voluntary time, we trade opportunities, we trade ideas.  

    So long as money is worth something to people, then it can be used in the process of getting wealth, but money it's self is not wealth.   My feeling is that this is the biggest misconception about money there is.  A database is just numbers, paper is just paper, gold is just gold.  When these things become money, that are given a power over society.  

    How happy would you be to have suddenly a million dollars of cash appear next to you?  Very happy.  Now image you are now transported to a tropical island all alone with no chance of rescue with your million dollars.  On this empty island there are no restaurants, no stores, no hotels and no people to staff them, what value does your money have?   This is my point.  Money is not wealth.  Money can potentially bring us wealth, when it works, but wealth it is not.  With money alone, you don't have a million dollars, just have a pile of heavy paper.

    This is why my definition makes so much more sense to me, and why the language we use around money doesn't make sense.  Does one "make" money?  Or does one "earn" money, or "acquire" money?  The only people that "make" money are the ones that manufacture it.  The rest of us are earning, gaining, or acquiring it.  Common language describing money leads us to indulge in fantasy about money, that it has some super ability to make everything better for us.  Money, has no power of it's self.  Power from money, is in the influence money has over people.  Money is useful, but only because it helps people organize their trade more effectively.  Money is powerful because people will often choose to honor it's value.  People have faith in money, and it's ability to provide an score or amount to something that can't be easily valued yet needs to be.  

    I have so often heard, how, "money makes money?"  Money does not make money.  What people are referring to is investments, and people can earn money from investments.  And how did they earn money from investments?  The same way all money is earned, by trading something.  What investors are trading is risk.  The investor risks money, and if the money is not lost by the investment, the investor is paid for assuming the risk.  Even if the investor creates a contract in which they would cease property if the money loaned wasn't repaid, they still have to risk the process of claiming the property, and hopefully getting the value or money they need from it.  

    I don't say all this to point out good guys or bad guys.  Trade is potentially a very good thing, when good judgement is used.  And the way human bias works, pointing out who are bad and who is good is much more complicated then people think.  There is a class struggle that has always been going on in human society.  The rich say the poor are not important like them, and the poor say the rich earn nothing unlike them.  The funny thing about rich people and poor people, is that they both think the other owes them something.  This post is about what money is, not about the squabbles we make over this age old debate over who has wealth and who doesn't.  

    Inflation is a fun concept in economics, and it's another example that money is only a system of measurement.  If you create more money, you have not created more wealth, instead with more money, the currency now only represents less of the economy.  

    What of the age old argument, I have heard so often; "money is evil."  Money does sometimes gets blamed for suffering in this world, but how can a tool of measurement be evil?  If people didn't have money, they would still want what other people have, and would scheme to get it.  They still would ignore the needs of people who are struggling while they were pursuing their own interests.  People would still judge others by their wealth, and yes without money there would still be wealth.  Money is no more evil than a kilometer can be evil.  Human behavior creates evil.  Saying money is evil is really how a child may understand something dangerous.  Somehow childish belief systems creep into adulthood, this is nothing to be ashamed of, it just happens.  Children need to sometimes understand things in a simple way, like calling something evil that has no intelligence, capable of choosing to be evil.  As our minds mature, we need to understand evil for what it is, something that only humans are capable of.  An animal can be dangerous, but it's following it's instinct, evil requires an amount of self awareness.  So humans can be evil, objects are just objects, not evil, and animals are just doing what they are capable of doing and are not evil.  It's so easy to fall into anthropomorphic way of thinking, and apply this to money.  Doing so we loose perspective, to fix the problems we think are created by money, we have to fix these problems with-in ourselves.   

    Long long ago, some very smart people figured out that rather then trading things, they could trade money.  Money is easy to carry, and easy to accumulate.  Money has a problem, our brain wants to think of money in an abstract way, and assign it meaning that it just doesn't have.  Money is important, money is useful, money is needed.  I'm not anti-money, money is great.  However, it's a great tool, nothing more.  

    My last illusion about money that I will attempt to discredit is "money solves problems."  Money helps trade, but the number of problems it solves ends there.  You can't solve a problem with money, and you still can't solve a problem with more money.  Problems are solved by people.  Yes, any problem a human being encountered that was solved, was not solved by money, it was solved by one or more persons.  Money can be used as one of the tools to solve a problem, but it will almost always not be the only tool, and tools will not solve a problem, people solve problems.  People have experience, people make plans, people use computers and write algorithms, people use tools and make tools.  Why do we indicate objects create success, people create success.  They may require tools to accomplish the success, and tools are important, and sometimes essential, but living intelligence solves problems, and only people have intelligence, not tools.  Automation of any kind is just another tool a person created.    So if there is a big problem that needs to be solved, what are the odds more money will solve it?  It depends on the problem, but likely money alone will not be enough, or may not be needed at all.  Because if something isn't being fixed, then what is really needed, is the thoughts, planning and experience of a person or persons.  Someone may say, "the project was failing, so we hired more workers, and we are back on schedule."  Well, to that, money payed for the works yes, but who hired them?  Who decided we needed more workers?  What research did they do to conclude that more workers were needed?  While money is important and perhaps an irreplaceable tool, it does not create success.  Even if you hire people, you still need them to make good choices, and learn or have learned the right skills for the job.      

    In conclusion, don't think that I'm indicating money doesn't mean anything, and can be spent without good judgement.  That would be foolish, always use good judgement in everything.  Personally, I love saving money.  I'm not a big spender, and it gives me joy to find ways of saving money, and a feeling of peace, when I can turn down a big expense.  It gives me a good feeling, knowing extra money is there, and has not been spent.  I feel safer, and safety to me is more important that luxury.   This is not the only good philosophy of money.  I can't describe the good ways and bad ways of using money in this post, and I don't feel I know them well enough yet to write about them.  Whatever your personal beliefs about money are, make it work for you.  Do you have to spend money?  No, it's a tool, if you don't need a tool, then put it on a shelf, and keep it save for when it's needed.  If you loose your money, because of some major bill that was out of your control.  Then don't worry, it was just a tool, and sometimes tools have to be used up to fix things.  One of the best ways to use this wonderful tool, is in helping others.  You have to be balanced in your choices, but each of us will at times get opportunities to use this tool to help others.   Perhaps the greatest lesson of money, is learning how we may use this tool, to bring something good into the world.  

    I like what money is, but I don't want in my own mind to become a servant of it, I want money to serve me.