Money is a medium of exchange. It has no value until we spend it. If we spend wisely, it becomes something. If we spend foolishly, it remains nothing. A penny saved is the same as a penny earned, but only when the saved or earned penny is put to work. Money can’t buy love, health, or peace of mind. It can buy things that support love, health, and peace of mind.
There is a TV Rabbi, Daniel Lapin, that has the most sensible notion of money I’ve ever heard. He says dollars should be thought of as, “Certificates of Appreciation”.
For brevity let’s call them: COA’s.
For example, suppose you do something useful for someone – something that would have been impossible, or inconvenient, without your help. The person you’ve helped is pleased with what you’ve done for him. He gives you COA’s by way of gratitude. You take the COA’s he’s given you to a restaurant where you are served a delicious meal. In gratitude for the fine meal, you give some of your COA’s to the owner of the restaurant. The restaurateur gives some of the COA’s he’s been given to the people who help him run the restaurant, and on, and on.
Rabbi Lapin points out that the only way to get COA’s – other than theft – is to serve other people. Commerce is about service to other people. Isn’t that the right way to think about the business of business?
Too much is made of rich or poor. Especially so when these words are used to put people into classes’. Very few people remain rich for long. Many do remain poor for too long. Attitude matters. “Oh, I’m poor, ‘can’t do nothin’ about it”. “The rich get rich and the poor get poorer”. That’s not true in America. Every day in America poor people who strive to become better, become richer. A little at first, then more, and more, as they persevere.
The Hollywood mogul, Michael Todd notably said, “I’ve often been broke. I’ve never been poor”. Can’t never could. God helps those who help themselves. And so on. If you fail, learn from your failure and try again. Repeat as necessary. Every rich person started out as a poor person. Inherited wealth is the exception, but It’s also very rare, and inherited wealth is usually squandered within a generation because the heirs don’t have the can-do drive of Daddy.
If you think of yourself as poor, you’ll probably stay that way. On the other hand if you are loved, healthy, and have peace of mind, you can’t get any wealthier.
True wealth is not the same as monetary riches.
Too much money can be as much of a problem as too little. The Greeks of ancient times were convinced of this. They favored balance in all things. They even had a doctrine for this: the Mean.
For the Greeks, the Mean didn’t refer to average; it referred analogously to the perfectly tuned string. Not too much tension, not too little tension - but the correct tension - which gives out the true and clear note. They thought this idea of the Mean should guide every thought and deed. They also thought the gods would punish anyone who gained too much, or did too little.
An often told story about Polycrates illustrates.
Polycrates was Tyrant (king) of Samos, an island in Greece, somewhere around 500 BC. He was famous, in part, for his great wealth. Friends worried that the gods would punish his excessive wealth with disaster. Polycrates thought they might be right. He took off his very expensive ring and threw it into the Mediterranean Sea. A few weeks later, as he cut into the fish on his plate, the ring fell out.
Horrified, he realized he was doomed.
Shortly after, his kingdom was overthrown by Persian forces.
Would Polycrates have fared better had he invested some of his riches into a bigger and better military force? Probably. What you have always matters less than what you do with what you have.
Money only has value when it’s used
In economic jargon the phrase, “velocity of money”, describes something similar; the value of money in motion. Economies boom when a lot of people hand out a lot of COA’s to their fellow humans. This produces ever increasing amounts of goods and services which is good for everyone. The speed with which this happens is measured as the, ”velocity of money”.
Certain Economists at the Federal Reserve believe they can control the velocity of money through Quantitative Easing;
a theory that’s been around since the turn of the 20th. century.
The idea is that more or less money issued by a Central Bank, such as the Federal Reserve, can speed, or slow economic growth.
It’s partially true. More, or less, money does affect economic growth. The trouble with artificially creating money is that it’s artificial. The money doesn’t represent true value. Items that once cost $1.00, now cost $1.25. That’s inflation (or, as the economists say, too much money chasing too few goods). Central banks try to control the inflation they created by raising interest rates. And so it cycles: up down, down up, up down … endlessly.
Adam Smith had a better idea.
In 1759, he wrote about the Unseen Hand of the Free Market. He thought that free people trading freely with each other would automatically create fair rates of exchange which would then stabilize the nominal value of any currency. False riches or ruin created by manipulating currency would no longer be possible. Smith’s Unseen Hand would ensure that the only way to achieve financial success would be by serving other people.
People served – grateful for the service – would happily award those who served them with Certificates of Appreciation, otherwise called dollars.
What’s true of economies is true of life in general. As we give, so do we receive. Do unto others as you would have them do unto you.
That’s the dollars and sense of it.