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What is Money? A New Perspective

by | Dec 14, 2015 | Uncategorized | 0 comments


A New Perspective

It’s funny how sometimes simple things can color or change our perspective. How we instinctively view things from our own understanding one way, when after a little thought there is a completely different dimension sub-consciously glossed over.

Such is often the case when asked the question “what is money”? Innately our culture ingrains into us that it is some physical object made of paper with green ink. Seems reasonable, since we all use money every day – surely we know what it is, and where it comes from? One thought is that money is simply a medium of exchange, but the same can be said of currency which has distinct differences. Currency is merely a representation money.

If you are a bit nerdish in learning economy and history of how money works then enjoy delving into the next couple headings. Otherwise to continue with the real meaning of this post skip to the heading of “Life Changing Perspectives”.

The concept of money

The textbook, answer says that money should possess three characteristics:

  1. The first is that it should be a store of value. While gold and silver fulfill this, they lack the third aspect of bring easily divisible. Gold and whatnot is rare, takes a lot of energy to mine, and doesn’t corrode or rust. By contrast, now that we are on a fiat system (which I will touch on in a minute) the value of the US dollar is going down over time. Since 1971 the dollar has lost over 80% of it’s purchasing power. Unfortunately this punishes people who save and enforces the need to invest in order to hedge against loss (I would suggest looking into ways to become your own bank).
  2. The second quality of money is that money needs to be accepted as a medium of exchange, meaning that it is widely accepted within a population as an intermediary, within and across all economic transactions.
  3. The third feature for money is that it needs to be a unit of account, meaning that the money must be easily divisible and each unit must be equivalent.

American Money in Action

Once upon a time, every dollar was backed by a known weight of silver or gold of intrinsic value that was payable to the bearer on demand. My dad actually has a “Silver Certificate” for one dollar from I think the 40’s.

Fiat Money

In 1971 our US dollar stopped being “money” and became a “currency”. We abandoned the “gold standard” and adopted a system known as “Fiat Money”. This is where currency derives its value from government regulation or law and is not backed by anything tangible. Now American dollars are the liability of the Federal Reserve (a private entity entrusted to manage the US money supply), which was empowered by the Federal Reserve Act of 1913. This is basically like giving someone who can’t control there spending habits an unlimited credit card.

Not to get into such things much but this introduced many issues into our system, which from my perspective, will inevitably crash because it is now unsustainable. The government started “printing” money, meaning that they physically print more money than we as a country produce in value, which devalues the american dollar. In the day to day living of our lives this has cumulative effects with inflation. The thing with inflation is that it compounds over time and grows faster and faster. Every time this has happened in a culture the currency has gone to its true value, which is zero.

As mentioned by Tim Mcmahon, the average annual inflation since 1913 is “only” 3.24%. But compounding something for almost 100 years at 3.24% results in over 2000% inflation (most of the 2000% inflation has occurred since 1940). Meaning that something that cost $9.80 in January of 1913 would cost $234.15 today! With things considered with inflation, cost of living, etc. you would have to make $287,000 to have the same purchasing power that $100,000 had in 1980.

Another way our society “prints money” is because of banks. Many people are unaware that for every dollar you save in your bank they are allowed to then lend out eight dollars (that may now be ten but I haven’t confirmed that). Money that doesn’t exist floating more and more into the world. Credit cards are a yet another form of currency which if used poorly simply enslaves people in ways they don’t consciously realize, they just deal with it.


I Lava You - Mountains

Life Changing Perspectives

Always having debt (cars, house, education, credit cards, loans, etc.) is a mentality that is culturally embedded into our society along with a lot of other negative beliefs about money which we will discuss momentarily. So we visited the thought of what money is generally considered and I would like to broaden your mind on this a bit more.

If you were to look at wanting to go rock climbing up a mountain (or in the case of our picture a couple of volcanoes) what would you need to accomplish this? Knowledge, tools, equipment, preparation, mentors or a guide, maybe even someone on belay (the right team), and perhaps some minor experiences in more controlled conditions…in short you need to come up with resources and experience to safely venture out. After having some mentoring with the multi-millionaire Kris Krohn, he showed me that money or currency, in a more ethereal sense, is a resource. Our ability to have more money simply comes down to what resources we come up with and how we choose to utilize them.

Beliefs About Money

There are many things that we are exposed to as being “socially acceptable” throughout life. Beliefs that we internalize in emotionally charged moments in childhood that anchor positive and negative beliefs. When asked what people believe about money there are many deep seeded thoughts that come to mind. There is not enough, many is hard to earn, money or the love of it is evil, money doesn’t grow on trees, we can’t afford it, things cost too much, I am not worthy, I am not successful, and the list just goes on and on. As such we develop our own personal “financial barometer” where we earn an income that we are emotionally comfortable with that is in alignment with our beliefs about life.

I used to have mind set at $40k per year. So after I got married and my wife and I were making a combined income of $70k it was a life style that while I enjoyed I didn’t feel at home in, and in time I sabotaged my income which then put us making less than our expenses and suddenly life shifted the opposite direction. The sad part is on a very sub-conscious level I was more comfortable dealing with the stress of debt, and bill collectors than the freedom of middle-class prosperity.

Break Free of Limiting Beliefs

Much like I used to, most people have a dysfunctional, adversarial relationship with money. Trying to retrain your mind and undo the brainwashing that’s been instilled into us throughout life doesn’t happen overnight. There’s a reason you have that desire in the back of your head to make a lot of money, because you can use that money to bring a lot of GOOD into your life and the lives of others. The problem is that most people can’t simply tell themselves to start thinking differently about money – to live LIMITLESS. If you want to start attracting money, stop seeing it as your enemy and think of it as one of your greatest allies. Money’s a friend that has the power to end sleepless nights of worry and physical pain, and can even save your life. A tool that when utilized can make a huge difference in the world and do vast amounts of good. Such positive feelings and paradigms of money lead people to build a stronger relationship every day.

How the Rich Think Differently About Money:

Average people prefer to be entertained and think that the road to riches is paved with a formal education doing things they don’t love, and/or they have a “lottery” mentality. Rich people believe in following their passion, prefer to be educated in acquiring specific knowledge and have mentality of taking action. The rich also see money through the eyes of logic, rather than looking at it through the eyes of emotion.

While the average person thinks you must “do” something to get rich and you must have money to make money. They set their expectations low to avoid fear and disappointment. The wealthy on the other hand believe that you must “be” something to get rich and are up to the challenge and utilize all the resources available to them. Rather than focusing on saving, the wealthy put their core focus on earning and investing, they learn when to take risks.

Wealthy people know that big money requires thinking about it in non-linear terms. They have become masters at generating money through ideas that solve problems. They realize there is no limit to ideas; thus, there is no limit to how much money they can earn.

While on average people let money stress them out, the rich find peace of mind in wealth creation, no matter what stage of creation it’s in. The wealthy believe in cultivating relationships with like-minded people that uplift and inspire them. Instead of “spending” money on the things they need the wealthy “invest” money in the things they need. They don’t spend money on filling up a tank of gas, they invest it in traveling where they want to go. While the average expect to struggle and make money and the expense of family time, the wealthy expect to thrive and enjoy even more quality time.


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