
You Worry Too Much About Money, by Cybersmythe
Here in the United States, we worry about dollars. Everything from cheeseburgers, to the gross domestic product (GDP), to the national debt is denoted in dollars. When I recently negotiated a salary at my new job, that amount was in dollars. That’s because the dollar is the kind of money that the US uses. Other parts of the world may worry about Euros or Yen or Pesos or Yuan or even other flavors of dollars. The point is that it’s all money, and it is probably not what anyone needs to be worried about.
GDP is especially pernicious because government spending is added directly to the bottom line, and scary words like “recession” and “depression” have definitions that are tied directly to the GDP. The government also controls the amount of money that there is, so if you want your economic numbers to look good, all you have to do is generate a bunch of money and spend it on, well, anything or nothing at all and presto! No recession! Ain’t the economy great?
When I say that you probably don’t need to worry about money, I’m not making some sort of hippy dippy claim about how if we were all to just live together in peace and harmony everyone would have enough, so stop worrying and join the chosen! On the contrary, my point and purpose is to give you something else to worry about. Paying attention to the flows of money won’t give you the real picture of how the economy is doing, so let me tell you where your attention should really be going. By the way, none of this is intended to argue that money isn’t necessary, only that it is not core to an economy.
Let’s start by the observation that money isn’t wealth, it only represents wealth. That’s because money, by definition, only becomes useful when you trade it for something. It’s the goods and services that you trade for that’s the real wealth. The problem, of course, is that it’s hard to compare all the myriad forms of wealth in a meaningful way, so of course one is forced to use money for that. Hence the use of GDP to describe how the economy is doing, but like the old saying goes the map is not the territory.
Times are good when you have all you need and more besides. Times are bad when you’re having to make hard choices concerning what you need. Sometimes times are bad for you when they aren’t for most people. Sometimes, times are good for you even when your neighbors have to tighten their belts. Given those definitions, it’s not clear that it is meaning to talk about what times are like, in general. However, people can intuitively tell when things are generally good and when things are bad, and measuring the GDP gives you a way to quantify that. Nevertheless, people don’t buy and sell little bits of GDP. They, instead, buy things they need and sell things they have, and the flow of wealth is in the direction opposite of the flow of the money.
Understanding that money is not wealth also reveals the source of phenomena like inflation. In principle, (hands waving wildly to distract you from the fact that nobody knows what all the wealth is, nor how much money there is) you can take all dollars in the world and put them in a pile, and you can also place all the wealth in a big pile, and assign a bit of money to each bit of wealth. That is, in some sense, the value of that bit of wealth in dollars. That allocation will change over time as dictated by the law of supply and demand, but there are other things you can do.
You could, for example, add a bunch of money to the money pile. Then, every bit of wealth now has more money assigned to it. That’s inflation. People often observe that the government need not tax anything because they can just create the money needed to pay for the things they do. While that is true, kind of, it is much harder to create that much more wealth that quickly. You could also remove a bunch of money from the money pile, and the result is what is called deflation.
We’re not likely to see deflation, however, because money isn’t just traded for things. Sometimes, money is traded for money. No, I’m not talking about currency exchange. Instead, I’m talking about trading the same kind of money in time. As in, I get a bunch of money all at once and I give it all, plus a bit more, back to you a bit at a time. A loan, in other words. Inflation makes it easier to pay the loan back because inflated dollars you use to pay it back are worth less than the uninflated dollars you borrowed. Since the US Government is America’s biggest debtor, the fact that the US Government also has control over the money supply means that you’re always going to see some inflation. Sometimes more, and sometimes less.
Looking at money as if it was not wealth also puts paid to Marx’s labor theory of value. The value is the amount of wealth created by whatever process, and is independant of the effort required to create that wealth. If no one values the end product of the work, then no wealth was created. You cannot make anyone rich by paying them to engage in unproductive labor. It makes no economic sense to pay one person to dig holes while also paying another person to fill them in, although you might choose to do that for other reasons.
Bear in mind that wealth is created and destroyed all the time. When I go to Whataburger to buy a cheeseburger, that valuable assembly of tasty food doesn’t exist an hour before I arrive and ceases to exist shortly after I buy it. Other bits of wealth may last longer, but nothing lasts forever. So, making new things is something that needs to be done continuously just to keep up. Wars are paroxysms of wealth destruction, so it also makes no sense to justify starting a war for economic reasons, although (once again) you might have other reasons for doing that.
So, that’s what I think. Paying attention to the money is simple but causes people to not see what is really at the heart of an economy becuase it’s the stuff that’s more important.

















































