What is Wealth & Money?

What is Wealth & Money?
On October 29th, 2009 Treg says:

Wealth is the things you & I produce.

Money is a MEDIUM of exchange. Money is simply the THING we use to trade our produced wealth.

So for Beck to say there is not enough gold... is a funny remark. It tells you he does not know what Money is.

Can Money be anything? YES and NO.

Yes it can simply "Be" anything, gold, silver, paper clips, chips of tin & nickle, sea shells, diamonds, tobacco leaves, green backs, fiat currency, bullets, cigarettes, potatoes, ....the list is endless.

Just because anything can "BE" money, does not mean its the best or ideal thing to "BE" money.

Remember, Money is simply a medium of exchange. It stores value, its easily trade-able, hard to reproduce, lasts a long time, easy to carry around, convenient, and most of all, recognized by those who you wish to trade YOUR produced WEALTH with for THEIR produced WEALTH as something that they can use. That is money.

Gold is not fixed in quantity. Its not unlimited either. Its tough to produce and production & discovery comes in bursts and droughts naturally; The key though is its not Man Made, its Man produced. That helps keep it scarce.

Now what Glenn Beck does not understand is that the rate of world production can be say 3%. That is "the world" (really various individuals) are producing wealth at an increasing rate of 3% over what was produced last year.

Now what about the "Medium of exchange", the thing we use to trade our wealth?

If the rate of gold increases only 1%, then, in a round about way, each piece of gold will grown in value and simply TRADE MORE items of wealth per piece of gold. In the same way, should more gold be produced, say 10% more, then in a round about way each piece of gold would TRADE LESS items of wealth per piece.

Its also the same with total world fiat currencies. If you pool all the world's fiat currencies into a basket and its increased say 10% over last year and world wealth has only increase 3%, then in the same round about way, more paper money would be needed to trade the same amount of wealth than last year.

Money and Debt. Sadly that is were the real problem is. Derivatives have cause lots of money/debt destruction. Deflation is now upon us all. Actual amount of money in circulation, I believe, is less than it was because of debt destruction. There is LESS money. Now people must go through the painful process of lowering prices to get money. Assets paid for over time, such as a house using a mortgage is in real trouble. All such OVERTIME assets are loosing value fast.

Derivatives, a real culprit OTHER than just government "Printing money out of thin air" is a real cause of our current economic crises. The 3rd cause is the wrong response by government, issuing more debt and dumping that money "into the banks". But which is/was faster? Debt destruction or new money/debt creation? I submit debt destruction. Hence this is why we see asset prices all dropping like a stone in water.

So lets get to the bottom-line. Like Peter Schiff says over and over again, we need to PRODUCE. We need to PRODUCE WEALTH to pay off the DEBT. We need to PRODUCE in order to TRADE for what others have Produced. We need to PRODUCE in order to be "wealthy again".

Here is an image I wish to give you. Imagine looking at the side of a mountain. On that Mountain is the words WORK TO PRODUCE WEALTH.

So down below that mountain, at the foot of the mountain, we have a few dozen hikers/workers. They look up at that big tall mountain and think to themselves, "Wow, thats a lot of work to get to the top. But look up the tail there. There is already some hiker/workers up the mountain".

And up the mountain, far up at the very top we see the "leader". Its Uncle Sam! And Uncle Sam is all hunched over, tired, with a socialist can in one hand, and a War Cane in another, and a huge entitlement Back Pack on his weary back. Slowly, about 2% a year, he climbs up that mountain. He looks back down the mountain and he sees other hiker/workers climbing the mountain of wealth. He sees the British guy, also with two canes, also with a huge backpack -- even bigger. Below him is two others struggling up that hill, a Frenchman and a German, also with super large back packs. But the Frenchman and German does not carry the War Cane stick, just a large fat social welfare one. Then just below them is several faster hiker/workers, maybe growing at 6%, 8% and even 10%. One looks like a Korean, and his hands look free. He has no War Cane and a simple moderately sized back pack which only seems to bother him a little. Then behind him is that faster moving guy, the Chinese guy. He wears only a fanny day pack and is moving along up the mountain farely quickly. At his rate, he will soon overtake everyone, including passing by old Uncle Sam.

Gee, if only Uncle Sam could drop those two heavy sticks and unload much of that huge entitlement backpack, he could pick up his pace at growing climbing wealth, perhaps even as fast as 6% would be great!

The question is, Why Doesn't Uncle Sam just do it?

The answer is? --- Is it not because Uncle Sam thinks he needs his two sticks of welfare & warfare and huge entitlement back pack? Yes it is.

Many people believe that the only thing that ended the Great Depression was A) FDR's social entitlement welfare programs, or B) FDR's World War II. Both answers are wrong.

What ended the Great Depression and PAID for FDR's War & Entitlement programs was Americans finding themselves as the LOWEST COST PRODUCER at the end of 1947. With Germany, England, France, Japan and the rest of the Industrialized world deeply in debt, with nothing but destroyed wealth (factories, farms), Americans found that BUSINESS IS GREAT! And so began the 1950's and Trade was Good.

As Peter Schiff points out, Americans are NOT the world's LOWEST COST PRODUCER OF WEALTH ANYMORE.

My fellow Patriots, we all must find a better way to PRODUCE wealth, a cheaper way, a more productive way, and Wealth will be at our door.

In Peace & Liberty,
Treg