Today we’re going to try to answer the question, what is money?
Now I know what you might be thinking. That seems like a pretty silly question, and maybe it is. But it’s something that’s really helped me personally with regards to my own money mindset.
And I want to share with you today because I hope that it might be helpful for you. Thanks again for taking the time to tune in today. I greatly appreciate it.
So as usual, when you’re defining what something is, there’s generally some value. In understanding what it’s not.
In last week’s episode, we’ve talked about money scripts. We talked about how it’s not a status symbol. We talked about how it’s not something that brings you power or self-worth, and it’s not something to be avoided. Nor worshiped.
So what is money?
A Medium of Exchange
Money simply is a medium of exchange. It’s a medium of exchange.
Now, money, as we know, it has taken different forms and fashions throughout the, the millenniums, but it’s been here for, for thousands of years. In the Bible, you can read in Genesis 17 that Abraham had money. And how he used it to buy and sell goods and services even way back then.
So let’s take a minute here and think about what a world would look like if we didn’t have money.
Now, as humans, we are very dependent upon the goods and services provided by other people. We can’t completely be self-sufficient.
So let’s say we lived in an agrarian type of society and you were a chicken farmer where you raised chickens, you need more in your life than just chickens.
So let’s say you needed some corn, corn to eat, or corn for your chickens, or whatever it might be.
And you could go down to the corn farmer and you could say, Hey, I want some of your corns, and he might be great. I could use some of your chickens and we can trade chickens for corn. No problem.
So now let’s say you go down to the person who makes fabric. because you need some clothes. So maybe your kids are growing and they need some bigger clothes, or your outfits have worn out from, from dealing with all your chickens.
And you go down to the person who makes the fabric and he says, Hey, I need some new clothes and I have these chickens. Let’s exchange.
And maybe the person who makes fabric says, thanks, but I don’t eat chicken. I’m a vegetarian. I don’t really like chicken. You would say, well, alls I have to trade is, is chicken.
And he, he says, well, I don’t, I don’t want your chickens. He goes, okay, well I need your fabric. What can I do?
He goes, well, I do, I do eat a lot of corn. If you go down and trade your corn for chickens, you bring back the corn, I’ll trade your corn for fabric.
So you say, okay, so you go back to the corn farmer and you say, Hey, I need some More your corn because the fabric guy doesn’t like my chickens.
Can we exchange? Maybe he does, maybe he doesn’t. And then you go down to the fabric and you say, okay, here’s the corn. Now gimme your fabric.
But you see how you had to play through that scenario a couple times. And maybe the, what if the corn farmer didn’t want more of your chickens, but. He wanted some fish.
So you have to trade fish for chickens to trade the fish, for the corn to trade the corn for the fabric, which really you wanted. That would be very, very complex.
So enter money, and therefore we have money as a means of exchange. So now simply you can go to the fabric guy and say, Hey, I want fabric.
Here’s some money. And then that person can take the money from you and buy corn or fish or whatever it is that he wants, it’s a means of transaction. That’s all it is.
Various Forms of Money
Now, the forms and fashions have changed over the millenniums. I’ve been in museums where I’ve seen rocks or beads symbolize the medium of exchange.
I’ve seen some old coins from the Roman Empire era with different faces and heads on it.
In the United States wampum, which is made from seashells, was the first recognized currency by the Massachusetts Bay Colony in the, in 1650. And they even went through rates of exchange to formalize it.
In Williamsburg, Virginia one time, and I, they have a museum there and I saw. North Carolina currency from around the 17 hundreds. So my guess I don’t really know is that every state had their own currency back then, and it was in this glass case to preserve it, and it’s kind of interesting. But all of those things, the Wampum from the Bay Colony, if you had it,
the North Carolina currency, the coins from the Roman Empire, they would all be worthless today as a means. Of exchange for goods and services because they’re not valuable. Because if I took that North Carolina currency and I gave it to somebody and they gave me something in exchange, a good another good, they would then have that currency, but they couldn’t do anything with it. It would be invaluable. It might be valuable from a collector’s perspective, but they couldn’t take it to Walmart and buy anything.
So what makes money valuable is the promise of a future exchange. So really with all currencies, whether it be a dollar or a Yen or a Euro or a Swiss Franc or a English pound or a Russian ruble, the idea is that I can exchange it today with somebody who gives me something that I want or need. Then that person can then take it in the future and exchange it for something else they want to need.
So it makes money valuable. Is not the actual paper or metal it’s made out of. That’s really worthless. It’s the faith that you have that you can purchase something of value in the future. That’s really all money is. It’s a medium of exchange. Let’s talk about a couple of characteristics about money.
Characteristics about Money
The first one is that money is quantifiable. There is only a certain amount of money in the system. In the United States it’s the Federal Reserve that controls the money supply. How much money there is in the overall economy transacting, flowing through to be used in terms of good and services.
So there’s a quantifiable amount, there’s a certain dollar amount, and the federal reserves tracks it. You can go onto their website and view it if you want to.
Talking about another characteristic of money. It is different from wealth in that regard. Wealth encompasses not just the tangible money, the dollars and the coins, and that which is deposited banks, but wealth also includes the value, the monetary value of things like houses and cars and lands and investments.
Those things have value. There’s also wealth is also negatively impacted by debts and liabilities, which why you’d want to be in debt, I don’t know. But it happens.
So wealth and money are different. Remember, money is a quantifiable amount. There’s a certain amount. So if you think of it as kind of like a pie, there’s only so much of the pie.
If I take a large slice of the pizza pie, now there’s less for everybody else. And see that limiting belief that we only think about money as a pie hurts us because inherently we try to be good people. And if we have too much of the pie, that means somebody else doesn’t have enough of the pie.
The thought to that process leads to everybody should have an equal amount of the pie, which is fine if everybody does the equal amount of work and has the equal amount of character .So the equality leads us to socialism and communism on forth, and that those are obviously failed economic systems, they don’t work.
Wealth is different than money in that, money is like a pie. But Daniel. Lapid describes wealth as fire. I went to a wedding and the at the end of the wedding, they always liked the sparklers and, out comes of bride and groom and they get in the car and they go off to the honeymoon and, and things like that.
Well, I was at this wedding and they had, they had like, Three foot long sparklers. I don’t know where they got those things. No idea is we held ’em up and everybody, they walked under ’em and stuff. Well, they had us online and they gave us each a, a sparkler, but they only lit the first two and, and each, in each line.
And they touched their sparklers and light it up and, and the next one, the next one. But you know, every time the next sparkler was lit, there was not less sparkle from the previous one.
Same thing if maybe you’ve been to a church service, it’s candlelight service for New Year’s or Christmas Eve or something like that, where, they turn out all the lights in the church and they take one light generally from off on the altar there, or up on the platform or whatever it might be.
And they light one candle on one hand and they, and they pass it down line. And before the end of the service, the whole building is kind of lit up.
Well, that’s how wealth is. So when you take one candle and you light another one, there’s not less light on the first candle. That’s how wealth is. Wealth. The more wealth there is, the more brightness there is, the more light there is in the room.
Just like a tide rises all boats, so does wealth. The more lights there are, the brighter the room is. The more candles there are. The more light there is, the more wealth there is, the better it is for the entire group around you. Unlike the pie, because the pie inherently leads us to a my part of the pie vice your part of the pie scenario.
The last characteristic I want to talk about here is how money and really wealth for that perspective are amoral, amoral so whenever in, in the English language, whenever you put the prefix a in front of something, it takes on the opposite. So a person who is a theist is a person who believes in God, and a theist is a person who doesn’t believe in God.
I remember in ninth grade biology learning about asexual reproduction. So in sexual reproduction, Two entities come together, have a sexual relationship, normally a male and a female, and they reproduce. There is such thing , in nature in science of called asexual reproduction. So something can reproduce without a male and female, if you will, right?
Like so bacteria, it just divides the nucleus and it’s, it’s asexual reproduction.
So money is amoral. Amoral.
Money and Wealth are a Tool
It’s not bad and it’s not good. It doesn’t have morals. So if you think about it, just like maybe a pen. So a pen is an inanimate object, and it too is amoral. I can take this pen and I could potentially poke somebody’s eye out.
I could take the same pen and I can write a love letter to my wife. The pen is just a tool. It doesn’t care what I do with it. Poke out the eye or write the love letter. It’s just a tool.
Same thing with like a hammer. A hammer is a tool. It can be used to demolish something and tear something down, or it can be used to build something up and repair the pen and the hammer don’t care how they’re used, they’re just tools.
It’s the person who’s controlling the tool, using the tool that determines the outcome or the usage of the tool. And money and wealth are really the same way.
Money and wealth are just a tool that can be used for good or it can be used for bad. Obviously. My recommendation is that you use it for good, but it’s just a tool.
It doesn’t bring status. It doesn’t bring fulfillment, it doesn’t bring happiness. It’s not something to be avoided. It’s just a medium of exchange at its base form in terms of money and wealth is amoral.
It’s a tool to be used, obviously first for yourself, hopefully. Secondly, for your family and for those that are around you in your community and those that you want to impact by it.
So today we address the question, what is money? We talked about what it’s not. We talked about how it’s a medium exchange. We talked about some characteristics of it, how it’s quantifiable, how money and wealth are a little bit different, and how both are amoral and it’s a tool that can be used for good.
So I hope this helps you a little bit in shaping your money mindset.
Next week we’ll continue with one or two more things regarding money mindset and talk about stewardship.
So until next time, I hope you have a great day.
