Money Measures Wealth

Why do we end up misunderstanding Money for "Wealth"?

exceeding the prescribed limits will be harmful

People and individuals including myself, have grown up seeing people buying goods with money. It's natural for us to identify money as wealth or a means of wealth. The fact being unimportant for us, we all unanimously aim our success on the amount of monetary income we achieve.

As explained earlier, our system has kept money as a means to eliminate exchange issues.
To learn the importance of money, lets see how money gets valued-
Our money today came to form as a representative which could be converted into gold or silver by application at the bank. Since banks issued notes far in excess of the gold and silver they kept on deposit, sudden loss of public confidence in a bank could precipitate mass redemption of banknotes and result in bankruptcy. Other than this, in today's economy our currency is floating in nature and the value is controlled indirectly by their controlling governments to achieve various economic goals that they might have set.

Economic achievements of nations depend on development. Development in-turn depends on value created using a standard supply of raw materials. Hence all currency values are indirectly affected and monitored by the amount of 'hard work' and 'out-come' of the hard work put in by individuals of a nation.

So to sum up the topic, when people make money in Futures, Derivatives, Options ect, they are going to harm the economy. There is no value exchanged for the money these 'businessmen' pocket. Infact it's just money changing hands. Hence when the increase or decrease of these incomes are recorded as revenue - it's a false claim. It's a claim that inflates the value of money.
Now picture the man that has made money in stocks exchanges spending it on his supplies and home. The man has eaten up on the efforts of so many other individuals who have utilized resources to produce value that can be sold on the market,  by waving his wade of cash. This is how a service get's undervalued for a start.
As an how other individuals notice the luxury and time enjoyed by such money lovers, they shall also make the effort to shift occupations. Eventually, as the number of such money lovers rise and value builders fall, the services that are provided by the value builders-the ones you would actually require to 'live by' shall start getting overvalued.
This is how we end up in inflation :) This is why today the European economy managed by massive banks that earn loads of 'Interest' have started falling short. This is the only reason why China is emerging as a Super Power. Chinese governments have always focused on production and value creation as a means of growth, and today most of the goods we use come from China. I am not a supporter of Communism, but i am a supporter of value - true value.

Collecting or giving Interest to gain from Capital is a primitive and flawed concept. 'Interest' is similar to blood cancer, where money acts as a circulation element in the body of an economy.
It's a disguised inflation trigger that has machine gunned our economic satisfactions. To conclude this topic, and give you an idea about the next, think about it - if you borrow capital on a fixed interest rate from me, and incur a loss in you venture and hence have not created any value (as spoken about in Our Current Econ-System), are you still entitled to pay me the fixed amount of money?
Considering the fact that my money is hard earned cash from value exchange, would doing so contribute to economic inflation or depression?

Basic Economic Structures

"Our current economy works on a system based on an upgraded barter system."

      Today, all men work to satisfy their wants and on the other hand no man works to satisfy all his wants. We don't need to grow food to eat it, sew cloth to wear it, or build a home for shelter.  We work on one of the human wants and exchange the surplus for the needful. 

      So in other terms this should be an ideal situation. This system will not overvalue or undervalue any human effort. All outcomes shall be valued based on the need or desire for it. Now, the element put in place to measure this value of human effort is MONEY. Currency is a beautiful system that eliminates the uncertainty of over or undervaluation present in the barter system.

     Money is the value we earn today for our efforts. The greater demand for the outcome of our effort, the higher we get paid. :) This is simple to comprehend. And most shall agree that this is exactly what is going on in the present economic system.

    How did the economic system end up in inflation and depression if the current system did not allow over or undervaluation of human efforts?

    The answer to this question is simple. Any individual or entity that gets paid without them contributing towards any one of the human needs will result in inflation. And any individual or entity whose efforts have been consumed and have not been reimbursed for it, has the potential to cause depression. This is how it works. Its a domino puzzle that triggers large scale problems but at the heart of it all, this is what starts it.

   So ask your-self. Have you been earning any money for doing a task that is not contributing to any materialistic human need? Each human need is fulfilled using a chain of tasks. If you are present in one of these chains then you are a contributing citizen.

   Business that allow you to earn money without having to work for it causes negative vibes through the economy. Money is the value of an effort, and if there is no effort and only money, then the true value of the money is degraded. This causes inflation.

Interest for example is an income that is recorded  officially by the World. I feel that this entire concept is flawed. Providing capital to a business is a good thing. Demanding a fixed return is a bad thing.

This is because there can never be fixed returns in a business. All business will face gains and losses. When a business gains, it means that it has successfully addressed important needs of a business. The efforts of that business has created good value for the economy.  This is a time where the investor can demand a return on his investment, and this is a correct proposition. On the other hand, when a Business faces a loss, it means that it failed to recognise a need and has put in efforts that have no value. If there is no value created, the investor can not demand a share. If a share is given to him is such a case, it shall injure not only the business owner, but the entire chain of individuals involved in the endeavour to create value.

Countries lend money to other economies and earn heavy interest rates. They reduce their in-house efforts to produce goods and services that cater to a particular need or want, and bank on the income on interest, and buy the products from another country. Now if the economy where this investment is done cannot pay the interest because it's value created is not great enough (like Dubai), everything will be screwed! 

Please refrain from collecting interest, no matter how small that amount may be. It's your money that gets played with. In other words it's your efforts that get played with. Stock Markets, Derivatives ect. are similar avenues used widely to make money. Such income is not a value creation but ensures the degradation of the economy. As said earlier, any money acquired without work harms the system, and we are all a part of it. 

 

 

Our current Econ-System

"All the gold which is under or upon the earth is not enough to give in exchange for virtue"

Plato

A look at our human form explains how most of nature's creations function. Human creations too are a creation of nature.

Our body needs to use each and every cell that builds multiple organs and tissues to work collaboratively towards it's survival. Each cell must act on what it was built for.

Similar principals are followed throughout nature, and each organism and it's environment does what it's build to do. We have witnessed elaborate ecosystems and food cycles, water cycles and wind patterns that collaboratively worked on the survival of all.

Considering the modern human habitat, his environment has little to do with the climate or availability of food and water. We live in different economies that provide us with a suitable or unsuitable habitats for survival. Our economy is built on enterprising individual efforts to satisfy a human needs.

Evolving from a barter system, we have long before understood the effective potential of working on one of our multiple needs rather than all of them. One man works on cultivating food, another makes homes, while the third makes clothes and later they exchange the surplus and fulfill all of their needs.

Today most of the worlds economies function on the same lines. One nation makes oil available, while another innovates technology, and the third arranges for capital. We follow a highly upgraded version of the barter system today.

So is it possible that such a system can have bugs that need to be corrected?

Like upgrades over an operating systems could get our machines into trouble, is our current upgrade a faulty one too?

Because if it's not, then what explains the European crisis, the price inflations and recessions taking place at one time in different locations?

Even after years of economic geniuses coining multiple theories towards human fulfillment, which of our efforts went wrong?

The 'Fact' is uncertain

Blog Introduction -
While you and I work out issues and our brilliant minds concludes an opinion, we have resided on a certain 'facts' of life that have remained constant.
The fact- which we understand as a universal truth has a source. To be certain about a fact, it is premiere for us to be sure about it's source.
In this blog, we shall attempt to question and understand the sources of economic facts. Facts that have caused surges and lows in the tides of our economy.
We shall attempt to cut ourselves from the text-book knowledge and trust our experiences to lead us towards the right paths to reach the peak.


“There's a world of difference between truth and facts. Facts can obscure the truth.”

-Maya Angelou