Wealth is not Money

Natural Money

Money is a unit of account—so it can be used to calculate wealth or to facilitate exchanges (and so avoid the inconvenience of barter). Money, in its modern «paper» or electronic form, can be rather easily cancelled (i.e. made no longer legal tender), confiscated, inflated away, devalued, or stolen.
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Money, said Aristotle, is an abstract legal power: the power to «gain wealth» (as described below). He identified gold as a «natural» form of money because it has suitable properties. Gold has been recognized as «real money» by people in most places and at most times through to the present.

These properties are: ●durable ●portable ●finely divisible ●consistent ●universally assigned value ●impossible to counterfeit ●rare and difficult to produce in large quantities.

Real Wealth

…is harder to make and harder to destroy. Wealth includes:

ClosedProperty…

…which can be confiscated or stolen, and may be easy or hard to destroy.

ClosedKnowledge…

…which is hard to gain, near-impossible to confiscate, difficult to steal, but can become obsolete.

ClosedRelationships…

…which are slow to develop, valuable if created and used wisely, enduring but easy to lose by carelessness or insensitivity.

ClosedServices…

…which are hard to disrupt or steal if built on good quality, fair pricing, attention to needs and trust.

The Importance of Money in Politics

Wealth is produced by people—not by governments.

Governments can only:

  • enable individuals to generate wealth
  • protect individuals who have wealth from being defrauded or plundered
  • interfere so as to destroy wealth
  • produce and control money (currency, legal tender).

If money was wealth, then governments could produce wealth by just printing money. Given confusion between the two concepts, governments regularly debase their own currencies by printing, even though the effect is to impoverish the people.
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Creating, printing or finding excessive money is nothing new. In the 16th century, when gold and silver were the primary forms of money, Spain plundered Aztec and Inca civilizations and brought back those metals in vast amounts. Having so much «money», meant inflation and a weak economy in Spain.

When Adam Smith wrote his great work in 1776 explaining what wealth is, those in government still believed that wealth was measured by how much gold and silver they possessed, and they ran society accordingly.

By providing central banking, determining legal tender, removing any tangible standard, and controlling provision of money, politicians are able to:

  • devalue the currency—to escape State debts;
  • inflate the currency—to steal from the people;
  • disrupt customary moral behaviours—and weaken society.

Read more about economic interventions by government.

Any change for the better would need to start the necessary process of curtailing current politicians' grip on power and wealth. The present monetary and banking system makes as much sense as the divine right of kings, and has a similar effect on ordinary people.

To avoid cognitive dissonance, most people tell themselves that whatever exists is normal or right and «those in charge» must know what they are doing. Now, as then, if everyone accepts it, then that is the psychosocial reality in which we are forced to live, until it goes too far. Which it will.

ClosedFree Banking 

Treating money as if it were a common and limited resource (like the air or parkland or markets) leads to governments defining and regulating it. Because money is not a concrete resource, but a tool or utility (like energy or a car or mathematics), societies can and should have multiple competing currencies and free banking. Anyone suitably licensed could offer banking and currency services.

Originally posted: July 2009; Last updated: 27 Mar 2014