Money Is…?

In 2005 David Foster Wallace told the following short parable in a graduation speech at Kenyon College:

“There are these two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, Morning boys. How’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, ‘What the hell is water?’”

With respect to money, many people are in the same position as the two young fish. While we are not literally swimming in a sea of money – although most of us would like to be – we do live in a world where the effects of money are pervasive. It is almost impossible to go very long without interacting with money in some way.  

We earn it, spend it, save it, invest it, and borrow it. We beg for it, steal it, and lie about it. We think about it, dream about it, hope for more of it, and worry about it. But it is impossible to escape it or ignore it. Money is all around us, but do we understand what it is?

In his excellent book, Financial Planning 3.0: Evolving Our Relationship with Money, financial planning pioneer Richard B. Wagner, who died in 2017, describes money skills as 21^st century survival skills. Wagner states, “…this world comes to us through money. In first world cultures, money skills access the stuff of survival. For first world “us” money is our key for food, shelter, and clothing. In fact, money is our chief vehicle for all sorts of mutual interactions.”

Wagner then laments that, unlike many other survival skills, money skills do not come naturally to us. The two young fish were born knowing how to survive in water, even though they didn’t understand what it was, but we are not born with money survival skills. Thus, it is vital for us to gain an understanding of what money is and how it works.  

To help myself understand money, for years I have been collecting various definitions, descriptions, and characteristics of money. Several of these come from Wagner, but they also come from many other sources. So to help everyone learn to swim in the sea of money we all occupy, let’s learn about money from some great thinkers. Swim lessons are in session.

Money is an Agreement: This simple but powerful concept was stated by Bernard Lietaer, one of the designers of the Euro. Money was literally invented by humans out of thin air, and it is what we say it is. Wagner elaborated, “…money is what groups of people say it is as far as they are concerned. From its inception, those who use money must fundamentally agree that it is money. Otherwise it is just dots of ink on pieces of paper.”

Money is Trust: Because money is man-made, and is an agreement, it becomes more or less useful based on the degree of trust we have in the agreement itself, and in others who are a part of the agreement. A lack of trust causes big problems for an economy.

This concept was illustrated hundreds of years ago by a great story. In 1565 the Turks sieged Malta. As the siege dragged on it became obvious that more money was needed, but there was no gold or silver with which to make new coins. Therefore, copper was used in its place, and the new copper coins were stamped with an inscription reminding the populace where the value of money really came from. The inscription read, “Non Aes, sed Fides” – “Not the Metal, but Trust.”

Money is a Messenger of Worth: “Money represents value. Money itself has no value. It only represents the value of other things we can get with it. It is a messenger of worth. – Dan Ariely

True, but only if there is sufficient trust in the agreement that gave it worth.

Money is a “Universal Utility Converter”: “Money is a universal utility converter. It enable’s one person’s economic needs and wants to be translated into the same units as someone else’s needs and wants.” – Eric D. Beinhocker

Wagner adds, “Money’s best feature is that it empowers human beings to self-organize for mutual benefit without violence or coercion. It facilitates the joining of unmet needs and unused resources at the junction where true wealth building and life support can take place.”

Money makes it easier for more of us to get what we want and need than anything else we have been able to come up with by making it easier for us to trade with each other.

Money is Complicated: “The money/human interface is as complex as it gets. Literally billions of variables stretch within it from birth to death.” – Richard B. Wagner

This suggests that we need to be patient with ourselves. No one gets it anywhere close to perfect. Do your best, continually learn, and try to avoid big mistakes, but be kind to yourself and move on quickly from money mistakes with the determination to learn from them and improve.

Money is a Time Traveler: “The essence of [money] is time travel. Saving is about moving resources from the present into the future. Financing is about moving resources from the future into the present.” – Matt Levine

The ability of money to travel through time adds to its complexity while making it both more useful and more treacherous. As Doc Brown and Marty McFly learned in “Back to the Future”, time travel can be dangerous and should not be taken lightly. The worst problems are caused by bringing too much money from the future to the present, but sending too much into the future can also cause problems. Understanding money’s time traveling properties will allow you to thrive today while creating a wonderful reality for your future self.

Additional Reading: Back to the Future: Money and Time Travel

Money is a Store of Value: One of money’s more useful properties is that it is a store of value. You don’t have to use the money you earn immediately. It is this property that makes money time travel possible.

Money is a Store of Stories: “As much as money is a store of value, it is also a store…of stories. Stories about our fears and dreams. Stories about our worries for the future, and our hopes for the people we love.” – Carl Richards

Money is a story…and it’s better to tell a story about money you are happy with.”  – Seth Godin

George Kinder adds, “Money is about us. It’s meant to be the great facilitator between the world and us – the facilitator of our becoming and being who we want to be, doing the things that we love, bringing all our vitality and passion and our heart into being.”

Money is emotional, and it is intricately intertwined with our life story. Learning how money works will help us tell a better life story.

Money is a Multiplier: Benjamin Franklin marveled at money’s ability to multiply or compound when he exclaimed, “The money that money makes, makes more money.” This is one of money’s most powerful attributes, allowing money you send into the future to multiply many times over by the time your future self needs it.

Money is a Magnifier: “Money is a magnifier. It just makes you more of what you really are.” – Bob Proctor

If you are a giver, financial success will allow you to be more generous. If you are greedy, financial success will amplify your greed. Most great philanthropists were givers long before they were rich. Money is not good or evil, it simply magnifies the attributes you already possess.    

Money is Insatiable: “Unfortunately, money is insatiable…It is simply not in money’s nature to ever be sufficient. This is a problem.” – Richard B. Wagner

John D. Rockefeller, the richest person in the world at the time, when asked how much more money he needed to have enough, reportedly replied, “Just a little bit more.” Most of us, regardless of our current situation, feel the same. I blame this more on human nature than the nature of money. Nonetheless, if your goal is to earn “enough” and be content with it, you need to understand that you will be swimming upstream against a very strong current.

Money is a Certificate of Performance: “Suppose you hire me to mow your lawn and afterwards you pay me $30. The money you pay me might be thought of as a certificate of performance – proof that I served you.” – Walter E. Williams

Williams then adds, “With these certificates of performance (money) in hand, I go to the grocer and demand 3 pounds of steak and a six-pack of beer that my fellow man produced. In effect, the grocer says, “Williams, you’re asking that your fellow man, as ranchers and brewers, serve you. What did you do in turn to serve your fellow man?” I say, ‘I mowed my fellow man’s lawn.” The grocer says, “Prove it!” That’s when I hand over my certificates of performance – the $30.”

The more skills you develop the more you will be able to serve your fellow men, and the more you serve your fellow men, the more certificates of performance you can earn.

Money is a Promoter of Peace and Good Will: “Consider, for example, the noble implications behind ‘Peace on earth, good will to men.’ What should these words mean, taken at face value?

Would they mean that greatly diverse folks could participate in common and peaceful enterprise? Would they insinuate that people who might naturally hate each other would be joyfully enabled to mutually exchange or care about the other’s continued well being? Would they connote mutual dependencies together with common and avidly sought sharing of resources, gifts, and talents? Would they denote relationship? Would they induce folks to transform swords into plowshares or lions to lay down with lambs? Seems likely.

Query: What does this better than money? Answer: Nothing.

In sum, I suggest that money is a real-world synthesis of this season’s greeting. It is a prime mover of peace and a fundamental conduit of good will.”  – Richard B. Wagner

Does money really promote peace and good will? Steven Pinker’s book, The Better Angels of Our Nature: Why Violence Has Declined, convinced me that it is true. Pinker shows how, in the last couple hundred years, violence of all types (wars, murder, rape, and other violent crimes) have been reduced to a small percentage of what they were throughout most of history.

While there are many possible causes for this many researchers, including Pinker, think the rise of democracy and free-market capitalism are major contributors. The freedom to trade with ever-widening geographic areas has tied the well-being of past enemies to our own well-being and turned them into business partners and friends. In short, money has made it easier and cheaper to get what we want through trade than through war and violence.

Additional Reading: Using Money to Spread “Peace on Earth Good Will Toward Men”

Money is Stored Energy: “Money is stored energy…Each time you see a dollar, imagine that it’s a charged battery. You spent your time to produce something of value, and now that value is stored in the dollar ready to be converted back to life energy (time).” – The First Habit Blog            

Converting life energy to money, and money back into life energy – or time – is the whole idea behind retirement, especially early retirement.

Money is Freedom: “Saving and investing wisely is your route to freedom. Don’t view it as saving. Think of it as buying independence. Money is freedom.” – The Bogleheads

Wagner adds, “[Money] is the perfect instrument for the exercise of free will.”

Jacqueline Novagratz, in her excellent book The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World, tells a story about helping a group of women in Rwanda start a bakery. In less than a year the women were making four times more money per day than they were previously, and far more than most people made in Rwanda.

In describing how this changed the women, Novagratz stated, “For the first time, their incomes allowed them to decide when to say yes and when to say no. Money is freedom and confidence and choice. And choice is dignity.”

Money is Measurable: “We love precision – and the illusion of precision – because it gives us the feeling that we know what we are doing. Especially when we don’t. The strange thing about money is that, even though we don’t understand what it is, it’s measurable.”  – Dan Ariely

We may not understand what money is, but we do love to count and organize it.  

Money is a Scoreboard: “Your money is a quantifiable analog for your life force – the aggregate of your time, skills, experience, persistence, and relationships.” – Rabbi Daniel Lapin

Because money is easily measurable, and most other aspects of our life aren’t, we tend to use money as a scoreboard for our lives. This can be dangerous, because, as Albert Einstein reminds us, “Not everything that counts can be counted, and not everything that can be counted counts.”

It’s smart to measure your money. Just be careful to never use your net worth as a proxy for your actual worth.    

Money is a Garden: “I often refer to money as one of life’s gardens.” – Bari Tessler

Money is a garden, and as horticulturist and botanist Liberty Hyde Baily reminds us, “A garden requires patient labor and attention. Plants do not grow merely to satisfy ambitions or to fulfill good intentions. They thrive because someone expended effort on them.”

Baily’s words are just as applicable to money gardens as they are to nature’s gardens.

Additional Reading: Growing a Prosperous Money Garden

Money is a Tool: “Money is a tool. It will take you wherever you wish, but it will not replace you as the driver.” – Ayn Rand

Money is nothing but a tool we can use to live a better life, and tools are useless – often even dangerous – if you don’t know how to use them. Learn!    

Money is Humanity’s Greatest Creation: “…money is quite literally humanity’s greatest single creation. In fact, nothing else even comes close. Money… is in the middle of all other human creations. All in all, pretty amazing stuff….

When there is also rule of law and a fundamental respect for contracts, personal freedom and property rights, then money lets us live lives worth living in manners that aren’t conceivable in its absence. It allows folks not only to eat but also to have access to life’s finer aspects.”  -Richard B. Wagner

It is fashionable to blame money for all our ills. To do this requires us to ignore – either willfully or through ignorance – the condition of almost all humans prior to the spread of democracy, capitalism, and free trade. By any measure humans have made remarkable progress over the past several hundred years, and money has been at the center of this progress. I believe there is ample evidence to support Wagner’s bold assertion.

I hope everyone learned something new about this remarkable stuff called money that is such a big part of modern life. What are your favorite “Money is..” statements? I am sure I am missing some great ones and I would love to add to my collection.