Money

Moolah, bread, dough, benjamins, fold, bacon,notes, bank rolls, cheddar, horse blankets, cabbage. What do all of these seemingly random terms have in common? Aside from the overwhelming prominent references to food, these are just a few of the slang terms often used in place of the word money. But, what is money? Everyone just kind of knows. There are songs about it, it comes in countless forms, wars are fought over it, it is in effect timeless. Do you have any, can I borrow some, how much do you have, what is someone's net worth, they all surround this idea of money. But what really is it? Oxford defines money as the current medium of exchange in the form of coins and banknotes, collectively. Clear as day now, discussion over. Or is it? 

We use this piece of paper, or numbers in a computer, to exchange goods and services, without needing to directly exchange goods and services. I have a chicken, you know how to build houses. I need my window fixed and you want to eat chicken for dinner. What is the proper chicken to window ratio? What if I don’t have enough chickens, could you replace half a window? I also want a new pair of shoes. What is the correct shoes to chicken to window ratio in conjunction with the homebuilders desire for chickens in conjunction with the shoemakers desire for chickens as well as whatever else they may want and need? That’s where money comes in. Instead of determining all of these ratios for every individual need or desire for goods and services, then trying to find someone who has similar desires (because what if the homebuilder didn't want any chickens), we have money. 

The power of money truly comes down to power to express what is important through prices. That phenomenon occurs across many levels. As an individual you trade your time and labor for income and then determine what is most important to you though spending that income. That idea continues from the individual to the town, city, state, government, and so on. Through all of these individual transactions we end up with markets. That is how collectively we determine that a 15 year old used car with 170 thousand miles on it is worth maybe a few thousand dollars. Not because any one person says so. There is likely someone out there that really wants that particular car, and would pay potentially thousands more. There are also plenty of people out there that you could not pay to take it. In between there are a lot of people who have a reasonable desire for that car. THey take into account their personal reason as to why they will pay that free thousand dollars, while the seller takes into account how much effort they want to put into selling the car. Just like that, a price is agreed upon. 

I have observed two main social ideas surrounding money and prices that I find very interesting. Accumulation of money and the fluctuation of prices. Starting with the accumulation of money. That is something that the vast majority of people aim for. It is something that isn’t really taught, but everyone just kind of absorbs as they grow up. They correlate obtaining money with getting the things that they want. It is a means to an end. But money doesn’t really do anything. You can get a stack of it and set it on your dresser. You can kiss it goodnight before you go to bed. You can get up in the morning and count it, stack it back up and place it nicely back on your dresser. You can accumulate it in the bank and try to make that number on your screen bigger. But ultimately, it doesn't do anything. You do all the work to sit there and watch it. That is not to say you shouldn’t have savings or an emergency fund. But, money can do so much more for you, you just have to put it to work. Many people do not know how. That breaks down in many social systems that could be an entire book. In the end, this fascination with accumulating money for the sake of accumulating I’ve always found interesting, and bluntly just wrong. 

Prices, in reality the perception of prices, is the other monetary social aspect I find fascinating. The reason being is the gross misunderstanding of prices. As a society we have been conditioned to think about prices backwards. We see prices going up, we want to do something about the price itself. We know gas is $.03 less on the other side of town, we will drive over there to buy 10 gallons of gas and save $.30. We treat prices themselves like an illness that needs cured, often through legislation. But the reality is, prices are more like symptoms. When you get a fever, the issue isn’t the fever. Though, most often we take medicine to alleviate the fever. The real problem is the cold, the flu, the inflection, whatever it may be. That translates to prices in ways of mechanisms like inflation, interest rates, banking regulations and more. Like before, that in itself could be a book if not multiple. When you attempt to legislate prices to “normalcy” without addressing the underlying mechanisms, all you're doing is taking medicine to try to alleviate the symptom. In the world of money, that often means when the problem comes back, it comes back even worse. 

With all of that said, what do you do? Prices, supply and demand, inflation, money, all of these terms and concepts can feel like a lot. You do one of two things. You take the time to learn it. In reality, it's not all that difficult though it is a lot. It's always been a personal interest of mine so I never found it difficult to read or listen to podcasts about money, finance, etc. Or, you find someone to help. You may change your own oil and replace your air filter in your car, but the vast majority of people do not replace their engine. You may trim your beard, but the vast majority of people do not actually cut their own hair. You may use budgeting apps and run occasional soft credit checks through your credit card company, but are you using a financial professional to maximize your financial potential? 

It can be a very guarded conversation, there are too many snake oil salesmen and multi-level marketing/networking sales systems (pyramid schemes) out there that leave you skeptical and hesitant. But, there are also licensed accredited advisors that not only can help, but truly want to. Whether the market is going up, down, sideways, or turning around, the difference is being prepared. Instead of just putting your 401k match in your pre-determined work sponsored portfolio and hoping, it is knowing where to put yourself today for whatever comes tomorrow.