Lately, I have been thinking a lot about money, what it is good for, what it is not good for, and its relationship to wealth. This is far from some economic treatise, but what I think is a common sense way of looking at money.
Money is Wealth in Potency
Money, in itself, is not wealth, but can become wealth. To have, say, $100,000 cash has a great deal of potential, but no actual wealth; without actual exchange, it is inert.
We must remember that money, whether dollars, yen, or denarii, is just a medium of exchange and holds no real value if there is no one with whom to make exchanges. If I had $100,000 in cash, it is worthless if I cannot exchange it for what I want. In such a case, it is purely potency and worthless.
Money is only valuable in terms of what assets it can be exchanged for, how much of those assets it can buy, and if the money-holder can find someone with whom to exchange in the first place. For example, let us consider acreage: if I have $100,000 and wish to spend it on land, I will have actualized its purchasing power into property instead of mere paper. In a sense, I have not lost $100,000 in cash, but have exchanged $100,000 in cash for $100,000 in land.
We must also remember that money does not possess any power outside of exchange. For example, I cannot eat $100,000 but I can eat off of my $100,000 in acreage and, if I am so inclined, could sell my acreage for money. Land, as well as many other assets, have an intrinsic value as well as an exchange value. Money only has exchange value, not intrinsic.
Thus, a billionaire like Elon Musk has much potential wealth, but no actual wealth until he spends his money on actual items of wealth.
There is a sense in which money possesses an essential actuality in that those with large amounts of it are often treated differently, but the rich are treated differently due to their potency. They may, at anytime, actualize their potential wealth to influence the world in a much greater way than those who are not rich.
Producers of Money
Let us reframe the common producers and consumers style of economics: everyone participating in an economy is a producer, either of resources/wealth or of money. The producer of wealth/resources needs no introduction for it is obvious, but the producer of money is a different animal.
The producer of money does not produce wealth in that he does not produce resources or some other product. He produces money by, primarily, exchanging his time for it. He is typically called the consumer, but reframed as a producer of money, it becomes clear that he need not simply consume product as the previous name implies, because he is, in my view, accumulating potential wealth. To squander potential wealth on silly consumables is a waste when it could instead be put toward tangible wealth.
It is easy to be hard on the producer of money since so many take the consumerist path, but that is only because they may not recognize potential wealth for what it is; or they are not strong-willed enough to accumulate potential wealth. As long as money retains some buying potential, he can save a lot of money over time in order to exchange it for something tangible like land. To continue with the $100,000 example, if I make that much living in a city spending it on silly stuff I do not need, then clearly it is wasted potential, but if I save it to buy a place out in the countryside, that is, to be less dependent on money, then this is a fine actualization of money’s potential.
Intrinsic Value versus Exchange Value
As already mentioned, money has no intrinsic value but can buy things with intrinsic value such as food. It can also buy things that have no intrinsic value like a movie or other entertainment (I say this because entertainment can really be had for free). Because food is a need and thus possesses intrinsic value, it follows that spending money on it is a decent exchange. But why not, if possible, produce the things of intrinsic value directly instead of relying on money to acquire them? Again, as we know with food, food bought at a store is often of dubious quality anyway.
Money is just a middle man, and it is best to use money to acquire something when it cannot be acquired otherwise. I, for example, cannot produce an automobile, therefore I must purchase it with money from someone like Ford who can. I can, however, produce vegetables on my land with a little work and investment in tools, so why should I opt instead for store-bought food? By growing my own food, I do not depend upon money to eat. In fact, with an overabundance, I can create money by selling the excess. That additional money can be reinvested into the garden, or invested into another venture.
The more things with intrinsic value we can directly produce, the less we depend upon money. If I grow most of my own food, I need less money to buy food; if I can fix my own vehicles, I need less money to exchange for a mechanic’s time. If one produces enough intrinsic value, it is entirely possible to live below the so-called poverty line but be living quite comfortably.
Another thing to consider is the intrinsic value of particular items versus the exchange value of money. No matter what exchange value the American dollar may have, an item like chicken eggs will always be valuable. Even if the dollar skyrocketed in value making 1 dozen eggs worth less than $1, the eggs retain their intrinsic value. The same goes for inflation: even if the dollar so inflates that 1 dozen eggs costs $50, the eggs’ intrinsic value does not change. Eggs will always be intrinsically valuable as food regardless of its exchange value. Further, I am happy to report that raising chickens for eggs is easy and profitable.
Exchange value does not often help matters in the present. If, for example, I need to haul a bunch of furniture from one town to another, $10,000 in cash is not the same as $10,000 in a truck. Remember, money is merely potential wealth, the truck is actual wealth.
Real Investing
With the previous example, we see that there are some instances where wealth is not truly lost but is retained tangibly. Retaining wealth is where property comes in to play: no matter what the current value is of a truck, whether $1,000 or $50,000, the truck will retain its unique abilities. If you happen to be in need of those unique abilities, then a truck is a good investment; you are not losing money, you are exchanging it for actualized wealth. This is a good thing, because it grants flexibility and more independence from money in that you do not need to hire someone, with your money, who has a truck to do truck things for you.
Land is probably the best example of wealth retention. If you own 100 acres, you have nearly unlimited potential for farming, animals, workshops, firewood/lumber, and other resources and ventures that could produce far more money or intrinsic value than the initial purchase price of the land. And again, ignoring the exchange value in money, the land has wealth potential that just needs actualizing. The intrinsic value is hard to quantify, especially in cases where a land owner leaves it to his heirs upon his death.
Cases for Potential Wealth
Despite my criticism for just sitting on money, there are cases where holding on to it may be a good idea.
Saving for a Big Purchase
This one is pretty obvious; if you need to buy an item or land or whatever that costs $50,000, it makes sense then to sit on whatever money you currently have until it swells to $50,000.
Retirement
This is a little wishy-washy in some ways and not in others. If I become old, then I will not be as physically able to produce things of intrinsic value. It therefore makes sense to save up some potential wealth for what I will not be able to do as I age.
There is one caveat to this and this is why I called it wishy-washy: retirement should not mean abstaining from real life entirely just to watch television until you die. That is precisely what many people do who could do other things that are productive. If retirement simply means quitting your main occupation to take on some different, most likely lighter work, then saving some potential wealth makes sense. Should retirement be defined as watching television until you die however, you must save an extraordinary amount of money since you are no longer going to produce anything at all. Such an individual is at the entire mercy of money’s exchange rate.
Catastrophe
Things can occur that are outside of our control that we may not see coming. Perhaps the primary money-maker in the family gets killed in an accident for example. It therefore makes sense to have a sort of emergency fund for such events.
Wealth Means Independence from Money
To have wealth is to have many things of intrinsic value. Back to our garden example, it is possible to be wealthy in food with a large garden that holds its intrinsic value despite whatever grocery store prices are. This is not a simple numbers game either, because money need not come into the picture at all once initial investments in tools and land are finished; at this point, one’s food supply has become independent from money. In the case of food, you also need not fret over an ingredients label.
One could be wealthy in land with its nearly unlimited potential. In fact, when you think about it, because everything comes from some land, when you buy a product from that land, it is as if you are paying for the productive ability of that land and not just the product. As long as one is willing to actualize some of the land’s potential, he can produce many things with only investment into tools rather than having to buy everything.
“But My Time is Worth Something!”
It most certainly is, and your current behavior is indicative of how you value it. If, for example, it is not “worth my time” to chop firewood, but it is “worth my time” to watch television, what does that say about how I value my time? Clearly, I do not value my time if I am not even willing to do basic productive human activities that have been around thousands of years.
Against Efficiency and For Redundancy
Boomer economics more-or-less bases itself upon the most efficient producers producing as much as possible and consumers just swallowing that product up. This leaves open the possibility of putting one’s eggs all in one basket: what if there are only TWO producers of a necessary product, say, corn? Sure, those two producers may be operating at an efficiency level impossible for the rest of us due to equipment and other capital, but the potential for a corn shortage is awfully high. Why? Because one or both producers may have a bad yielding harvest, or perhaps they are attacked by an outside agent interested in disrupting our corn supply.
Efficiency is great if your interest is in watching numbers go up, but redundancy is what keeps civilizations running for centuries at a time. Imagine instead that 50% of all Americans grow some of their own food with the other 50% being grown by a few highly efficient farms. If one of those big farms goes down for one harvest, there is not going to be mass starvation or other catastrophe; food may be a bit more scarce, but redundancy makes certain that losses will be minimal. Some will not even realize that there was any loss at all, because they were entirely covered by the blanket of redundant home gardens and small farms.
Typical libertarian capitalism does not like what I have described, because such faithful adherents think as long as numbers are going up then things are fine. Redundancy, to them, is not as profitable and not worth pursuing; nevermind the fact that it lessens the effects of potential failures of large industries. Of course, without getting too off topic, capitalism, because it concerns itself only with profit, tends toward a few very large, very efficient industries over many redundant industries that are actually the safer bet despite not being as profitable.
The Philosophy of Exchange
Now that I have written thus far, the so-called consumer economy is the root issue with why Western society has become so vulnerable to every economic wind. When the vast majority of people rely upon being able to exchange their dollars for goods, all it takes is for someone to control the money to control the people. Need I mention the Federal Reserve, large international banks, and other entities?
What I am attempting to lay out is an alternative to slavery to fiat exchange with its inflation. Sure, there are good crypto currencies out there and classic bartering that circumlocute the issue, but these have their own short-comings; despite that, they are certainly better than fiat, but crypto in particular suffers from some of the same issues in that it is potential wealth and requires finding an exchanger. By all means however, use either strategy; they are both more freedom-oriented than fiat. If we can instead become more independent from money itself, we will have true freedom in property.
“But they can take your property away!”
If someone is trying to take your property away, you have bigger problems than what I have described. This is a pathetic cope to do nothing.
Practical Suggestions
What then shall we make of this in terms of practicality? Let me be clear on what I think money should be used for: money should be used to buy independence from money whenever possible, and to buy the things that cannot be obtained without it. If I am currently dependent on a $100,000 salary, how can I become less dependent, that is, depend on less money, say, $20,000? The normie reaction will of course be, “You’ll be poor! How can you possibly make it?” without understanding the intrinsic value that could be had rather than just money. If, for example, I own my own house, I do not depend on, say, $700 a month for rent money. If I own my truck and can maintain it, I do not depend on $400 for a truck payment, not to mention maintenance. We must own actual wealth instead of potential wealth.
So what are things worth buying as actual investments, especially long term? First and foremost in my mind is land; I mean actual land, not some 1/4 acre lot in a suburb with a Home Owner’s Association. Even 1 acre or less that you can truly call your own is worth it, but the more the better. I think of land as a kind of master resource, because everything that I want to do must be done somewhere and the land itself will have untapped potential. And remember, land can be given to heirs which creates long-lasting family roots in an area.
To continue on land, obviously we need a dwelling of some sort. Unless you are comfortable with living in a teepee your whole life, you are going to need to spend some money on either a dwelling like a mobile home or materials for building a house from scratch.
Tools are generally a good investment as well, because they allow you to fix or build things that you would otherwise have to take to a fixer or builder of some kind (i.e. spend money on their labor). I am speaking broadly in that everything from a hammer to a truck is a tool. Of course, that does not mean a rarely used tool like a slide hammer is necessarily worthwhile for most people; one must use a little discernment on the purchase of tools else, much like guns, you end up buying a whole bunch you never use. For example, if you plan on gardening, you need a good hoe. Generally speaking though, tools are a good investment and, yet again, can be handed down to heirs or those in need.
If possible, animals and a garden are good investments, because they make it so you need not buy as much from a supermarket. Each require an initial investment such as breeding pairs for animals and seeds for plants, but this really is not all that expensive.
These are just some ideas of where to put your money or, as I have labeled it, potential wealth. There are a probably great deal more, but this is a good starting point.
If you find that you are a producer of money, relying entirely upon being able to exchange your money, consider saving up as much as possible to buy all of the above. Effectively, fleece your job for all that it is worth in money, save it, and buy the stuff above. No only will you possess actual wealth with intrinsic value, but thenceforward, you will not need as much money.
That is the goal anyway, to need less money. After all, would it not be great to have already bought the major things needful like land, a dwelling, tools, vehicles and such, and no longer needing to work 40 hours a week to make $100,000 a year, instead only needing to work enough to make, say, $20,000 a year for bills and other constant expenditures? Think of the time you will have reclaimed to do normal human activities instead of modern drudge work! And despite not having much money, you will still have wealth in the form of property and my favorite form of wealth not yet mentioned, discretionary time.