The Transient Nature of Money

Is money really funny in a rich man’s world? Is it a good measure of success? Can it buy happiness? Is it the root of all evil*? What exactly is money, and how are we supposed to deal with it? There are so many people who write about it, but surprisingly there are few real answers. We all enter our adult lives more or less ignorant of the world of money, but we know one thing – the world will judge our success by how much of it we manage to accumulate!

Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.  

Benjamin Franklin

Let’s start with money as a measure of success. The misquoted scripture above* is responsible for severe conflict on the matter of money. No, the Bible does NOT say that it is the root of all evil; it says that the love of it is. In other words, greed is the root of evil – we want more than we need, and when we have that we want even more. Have you ever stopped to think what you really need? It isn’t as important what you have as whether or not you can be content with it.

An important lever for sustained action in tackling poverty and reducing hunger is money.
Gro Harlem Brundtland

That isn’t to say that it cannot form part of your goals to make a lot of money or even to be comfortably wealthy or stinking rich for that matter. You are certainly able to use that money for good and will not be able to contribute much unless you also succeed financially. The point is that you have to decide to be content with little or with much. What is your specific financial goal? If you are unhappy because you do not have enough money, you will be unhappy when you have a lot too. If you are content with having enough to survive, you will be content when you have much too. First be happy, then make a lot of money.

Anybody who thinks money will make you happy, hasn't got money.
David Geffen

You might also decide to make/take as much as you absolutely need. Living a minimalist lifestyle can be very fulfilling (read more here - The Minimalists). Either way, you should only measure your success against your own goals, and not against other people or their expectations. It is in any event only a partial measure of success, despite what many motivational speaker s would have you believe. Not being a financial success (on your own terms) will severely hamper success in the other areas of your life though, so do not neglect this part of your life.

If you want to feel rich, just count the things you have that money can't buy

Imelda Marcos said that; “money was made round to go round”. OK, don’t go analyzing that to death and find all the reasoning flaws. The point is that there is some merit in the quote. Money is simply a way to make bartering easier (do I need to explain this, let me know?) From the earliest time money represented people’s trust in the currency more than anything else. It was originally coined in precious metals and therefore had intrinsic value. Later notes were backed by such precious metal reserves in the form of silver certificates or gold reserves covering the monetary value. Today there are generally no such reserves backing the money, and the only value in the currency is the trust people have in exchanging it for their services and the goods they need. If the common trust in the currency fails, so does its value to trade.

Health is the greatest gift, contentment the greatest wealth, faithfulness the best relationship.
Buddha 

Apart from this, one must also consider the nature of wealth. Wealth is measured in terms of trusted currency, but it is in fact quite distinct from it. If we say that Bill Gates is worth 12 Billion dollars, we are not saying that he has that amount of liquid cash or currency. We are expressing his net worth or wealth in terms of currency, but that is not what we are talking about. Wealth is in fact simply a factor of productivity. The more production takes place, the more net worth is created, and the value of currency in circulation will never be an exact reflection of wealth created. 

A man with money is no match against a man on a mission.
Doyle Brunson

If a disproportionate amount of money is in circulation compared to actual production, then the currency value will drop (recent Zimbabwean history is a good example, as is German currency after the first world war). I know there are many other factors too, but these are the basics. Conversely, massive production and a shortage of currency to reflect this will inflate the value of money, as you can then buy more widgets with the same amount of Simoleons due to over supply. On a macroeconomic scale, producing wealth is simply a matter of increased productivity. A nation will prosper in proportion to the productivity of its citizens.

Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.
Erich Fromm 

What may come as a shock is to find that greed is more responsible for insufficient production than any other factor. You see, if a rich man, company or even a group of companies over produce a commodity that they supply to the market, then they have to drop the price and they make relatively less per item compared to production costs. Hence an enforced scarcity of needed products and services, under payment of labour and price fixing by groups of companies producing similar product.

You can only become truly accomplished at something you love. Don't make money your goal. Instead, pursue the things you love doing, and then do them so well that people can't take their eyes off you.

 Maya Angelou

 

OK, so money is nothing but trust and wealth is production and it should be obvious that by restricting production, corporations eventually commit a form of seppuku (suicide). This is because they engorge themselves with wealth to the detriment of the public they were meant to serve, and who are ultimately the consumers – thus leading to unemployment and general poverty and a whole host of evils. That is what Imelda Marcos meant; money is meant to go round, it is nothing in itself but a means to trade. As long as it does that, it is itself productive and feeds the economic process. The moment it is hoarded, it is like a clogged drainpipe, it causes rot and a horrible stink.

A wise man should have money in his head, but not in his heart.
Jonathan Swift 

This should already spark some thoughts on your place in the financial system, what your contribution is or should be, what you want your specific financial goals to be, etc. Mostly though, this article is meant simply as background so that we can continue discussing how to deal with finances in future essays. Until then, measure your success not in money, but in terms of whether you are leading a purpose driven life and attaining your specific financial goals amongst the other goals you have set yourself. This should in no way be simply a measure of wealth, number of toys owned or how you compare with others, but rather if you are content with your financial position and progress.