Money is a tool...

I have been discussing the reality or nonreality of money a lot lately.  It is, of course, tax time and I have had personal experience with some recent information about the distribution of money in our country and investment decisions.  Most of us know there is a money distribution, with some people having more than others.  Most of us know this is not necessarily bad.  Concentrations of money allow certain types of capital investment and projects to go forward.

But let us consider for a moment.  Is money wealth?  A friend posited to me the answer is "no".  At first I thought maybe I had missed the point.  Money measures wealth, doesn't it?  Then I talked with her some more and I thought about it more.  Wealth is not an electronic number in a computer.  Wealth is not even a piece of paper.  The numbers we all consider money are just that...numbers.  It only has value because we accept that it has value.  If the 99% that had small numbers just refused to accept the 1% that has high numbers, the money would be worth nothing.  In fact, if just some of us lost faith in the numbers, the whole system could crash.

Of course, we still measure money.  And that is appropriate.  But it is not wealth.  Wealth truly consists of tangible and intangible things.  It consists of your home, your clothes, your car, and some personal effects.  It also consists of your friends, your community, your Commonwealth and your quality of life.  The fallacy is thinking that all wealth can be quantified.  It can, but it cannot be sold or bought, so the quantification is worthless.

So if money is not wealth, what exactly is money?  A friend recently told me that I like to define things by what they are not.  I just did that.  But now I would like to posit that money is nothing more than a tool.  It is not a thing in and of itself, but is more like a hammer that can be used to make something.  A hammer may be "worth" $20.00 US.  But what you can make is much more important.  We cannot live by hammers.  A dollar bill may be "worth" $1.00 US.  Or more or less depending on the country and the perception.  Or it may be worthless on a desert island.  But what you can make with that dollar is much more important.

The question then is how shall we use the tool.  It appears that most of us in the 99% use the tool to accumulate consumer goods.  A discussion with another friend made us question this use.  It is as if we simply purchase things that advertisements and our desires tell us we "need", whether we really do or not.  As long as we have the ready cash this is relatively harmless.  However, in our society, the economic system is based on continuous growth and continuous consumption.  Thus, we purchase not only more than we need, but more than we can keep track of.  We need to purchase storage areas and them pay rent to keep all the stuff we have.  When we default on the storage facility it is sold to someone else, who has to store it all in a storage facility.  We create a whole system of storage of excess goods.  We do not fix broken goods, we throw them away. For a truly hilarious take on this, see YouTube George Carlin's Story of Stuff. 

It appears that most people in the 1% use the tool to make more money.  In other words, it is nonproductive.  Basically, a very small part of the money in the world actually "circulates" and acts as a tool to create something.  Only that money which pays for labor or services (or the tangible products of labor or services) actually circulates.  The rest is nothing more than capital magically building upon itself.  Since 99% is owned by 1% (more or less), that means that only 1% of the money is actually a useful tool.  Therein lies the falsity of trickle down economics.  99% of the money never trickles to anywhere and continues to do nothing but grow itself. 

Again, there is some value in accumulating money.  There is a value in savings.  However, we need to think what mix will create the optimum conditions for life and for wealth.  When most of the world is even worse off than the poorest American, we can see that the distribution of money in the United States (and the industrialized world) is even more skewed if we were to include the even larger numbers of people that are actually alive.  Remember, money is not real.  It is a tool.  You wouldn't hoard hundreds of thousands of millions of hammers.  And we shouldn't hoard hundreds of thousands of millions (and billions?) of dollars.