by Peter Talkenberger

What is money? Is it based on scarcity? Almost all of us have too little of it when we need it, and lose too much of it in times when it looks as if there is an ample amount of it in our hands. But that leads us to a first observation: apparently money has more to do with management of things than anything else. And clever management has to do with the resources one has available physically and mentally.

Historically, money is a substitute for carrying eggs, stones and other commodities used in exchange for something else. Initially things like beads or diamonds as well as silver and gold were used to represent a value called money. Those who managed money were rulers, kings, emperors; and they more often than not used it to cheat their people and pay expensive and useless wars or a luxury life of a few. This brought us revolutions, wars, monetary reforms, super inflations and the loss of the gold standard to support paper money. Credit cards finally made men into slaves of banks and the general ignorance about the subject and a bunch of false data contributed to the general condition in which we find ourselves.

So lets put a few things straight here, in an attempt to lessen slavery, dependency and mismanagement due to false or missing data about money.

Money is a symbol of trust. Like love, like friendship, like a gift. Only that it's not given out of friendship but in exchange for something. A hundred pound sterling represent a value. The stability of the value they represent indicate the stability of that currency. Once upon a time a dollar represented x ounces of gold, for many decades. Since the Federal reserve and the US government abandoned the gold standard the buck is not worth more than a lick and a promise, if you look at it honestly. You trust the Fed or the government to keep issuing you the same value for your dollar in ten years as it has now. At the same time you know for sure its value will be half or less of that. So you start to worry, as the piece of paper you got in exchange is programmed to lessen in value. So you tend to either spend it and buy something more lasting like a present for your wife which secures her love, or you enjoy life more, or you invest into something which secures the value of your worn out and creased up buck.

You also save for emergencies, illness, old age. Hoping they will not hit you too badly and relying on some insurance company to take care of your needs by the time fate comes over you.

So what's money, after all? We might say, it's a way to manage life so that you survive easier. Today, tomorrow and some time after that perhaps. 

What's inflation? Boldly stated by a friend of mine: it's the governments way to get rid of its debts. In case that's news to you, look at some facts: The US government issues a bond saying it owes 1 Million dollars. The FED (Federal Reserve Bank, a private institution issuing the US currency notes and being responsible for its control) or other investors give the government the million dollars. There is nothing to back them up but that piece of paper - the state bond. To get the debt paid with interest the state issues you a tax bill. As the government has to pay interest, they have to make more debts, because they always spend more than they make and can only pay the interest out of new debts. So they issue you another bond, have more dollars borrowed or printed and thrown into the economy, and there goes the value of the dollar as inflation eats it up (if you think thats too simply stated, work it out in your next monopoly game.)

Whats with the money you borrow to the government or any of its organizations? Or to a bank or any other institution? You don't lend them money you say? Wait: what's your savings account if not lending another money against some interest? What's a state bond you sign if not lending the government money against some interest? 
If you are good at this, the interest is above inflation or keeps pace with it, so your money does not lose its power to buy what you expect. If you are clever, you stay well ahead of inflation.

Too simple? Unfortunately, yes. But to make things complicated, government, banks, financing institutions and first and foremost, economists and the inventors of options, derivates and other financial gimmicks thoroughly mix up the cards and mess up the money market from time to time. The common people lose money, savings, pensions and hopes. The very clever ones win in those times and not always they do so by ethical means.
Some have calculated that about every 100 years a big cataclysm destroys all savings and the hopes and existence of millions of people.
Then it starts all over again.

That's money. Sober and simple look, isn't it.

There are only two kinds of people who never seem to lose in this game: those who have such a wealth that they can influence the market to a large degree, or those who are always creating money in any situation virtually out of nothing. You cannot just decide to be of category one, the lucky rich ones we all envy a bit. But you can do something about category two. 

As a child I had a friend who made money from selling little 10 penny things to other friends. He bought them lord knows how and where, but he sold them. And made money. Another one cleaned the neighbours garden once a week. Got his 5 pence piece and went and spent it. Made money and survived. Another sat down with other pupils and helped them understand what they had missed in school, and got some money for that. Exchange, exchange, exchange.

That leads us to the next conclusion: Money isn't naturally flowing to you. One has to exchange something first. Then comes money. One has to exchange what others want or need or like to have. That exchange has to be valuabe to others so they give money for it, small or big, in whatever currency or goods does not matter. (Forget the complications of Keynes, Marx, and others of that ilk, its really simple.)

And that resolves all there is to know about money. It even resolves any worries you might have about the subject, if you look at it. Own a house and rent it out - that's an exchange for someone who might be desparately looking for a home to rent. Own a piece of knowledge and teach it to people for money. Own a taxi and take others around. Own the ability to cheer up people with your smile and sell yourself at any party you can get invited to. There is an infinite number of ways to use ones abilities, talents, resources or knowledge and give exchange, and in that way you create a desirable flow which in reverse will give you something valuable in return. It may not always be a piece of paper with the american eagle or the signature of the European Central Bank's president printed on it. Nevertheless, if you can pass it on and other people accept it, you get something else in exchange again for it, and it is valid money. (Someone made use of this maybe after reading my first publication of this article and invented Bitcoins.)

And the big lie was that only a few have the right to issue money. Money, even currency is not a privilege of any institution, single person or the government. It's a natural right of every living being to create it, exchange it, save it or spend it. Even a simple IOU written on a scrap paper and handed to someone may be considered money, even if only between two people, and if a third one considers it valuable it becomes a valid currency - it can be exchanged. (The word currency has to do with current which is a flow!)

When you go shopping next time, try to see the exchange factor with another eye.

And spending some of the money for a good purpose or to help someone is not a bad thing either. Even if you do not get anything to carry with you in a bag - It may loosen up your mind and open it for new ways to flow some money back to you, sometimes more than you expect. Sometimes it can make your heart full of joy even if all you get is a big smile.

Definition Money:
   noun 1) a medium of exchange in the form of coins and banknotes. 2) wealth. 3) payment or financial gain. 4) (moneys or monies) formal sums of money. 
   ORIGIN Latin moneta: 'mint, money', originally a title of the goddess Juno, in whose temple in ancient Rome money was minted.
Quoted from: The Oxford English dictionary,


Some Axioms* about money
1. Something to survive must grow.
2. Growth is either in size (volume) or in value (as seen by others).
3. An investment is as valuable as it bears fruits and as destructive as it eats up resources.
4. An investment is as good as it is backed up by exchangeable value.
5. To low a risk and too high a risk are equally destructive.
6. An investment with too low a risk will not keep up with inflation. 
7. An investment with too high a risk will go wrong in direct ratio to greediness.
8. The risk level of an investment is determined by the ratio of predictable to unpredictable factors in that investment.
9. All risk is modified by viewpoint.
10. All value is dependent on viewpoint.
11. Money is a symbolic value assigned by a majority of viewpoints.
12. Money is a symbolic representation of energy.
13. Money to be energy must flow.
14. An economy thrives to the degree that it has freedom and barriers in balance.
15. Any game is based on competition.
16. The purpose of government is to establish a playground and agreeable rules for the players.
17. An optimum financial solution is one that gives all people involved a win against minimal loss.

* Definition Axiom
   noun: a proposition regarded as self-evidently true. 
   ORIGIN Greek axioma 'what is thought fitting'.
Quoted from: The Oxford English dictionary,

About the author:
Peter Talkenberger is author, editor and co-author of over a dozen books on the subject of investment, money, real estate, marketing and sales techniques back in the 1990ies.
In 1996 he became a real estate agent and founded his first company in 1997. Today is director of two real estate companies and valuator of property and an independent property consultant. His focus is on investments for foreign investors in Germany and he was one of the first to promote Germany as an attractive country for property investments since the early 2000s on a broad international level.

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