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Economic Divorce – Money $$$ vs. Physical Wealth!

July 22, 2013

The purpose of money (historically) was to represent increases in our physical (material) WEALTH. As physical wealth increased, money in circulation would need to increase (to maintain stable prices). The role of money was to denominate the ‘value’ of the wealth being produced. Today, however, our MONEY (now digital units) have separated themselves from our real physical WEALTH creation and also the growth of this wealth. This is obvious as we THINK about the behavior and actions of Bernanke and Company (the Fed) and their manipulations of money units. Let’s think about the NATURE of money and what is happening today within finance and economics. Why is our MONEY divorced (decoupled) from physical WEALTH to some extent? If you adopt a Dualistic view of reality, this would help with your understanding! Watch this YouTube video by Bix Weir for understanding of today’s manipulated digital money:

Personally, Bix Weir, understands money better than 99% of our financial pundits IMO!

These barrels of oil are physical wealth. The price of a barrel, however, is a derivation from the human mind. Note this difference! Oil is ‘matter’ and Prices are ‘mind’!

To understand this phenomena (divorce and/or decoupling) we need to define what we mean by physical wealth and money. Physical wealth is what Capitalism is all about. We use our natural resources to produce things (widgets) which are then exchanged in the greater marketplace for value. Money has an important role to play under Capitalism. What we need to recognize, however, is that MONEY itself is NOT wealth. Money is merely a TOOL for ‘valuing’ wealth. Valuation of wealth is a mind exercising process (we could call this exercise a ‘out of body exercise’). This means that ‘value’, ‘prices’, and the ‘money’ used for these functions are derivations of the HUMAN MIND (spirit). To illustrate let’s think about a common item of wealth (a barrel of oil). The barrel of oil is our physical wealth (produced from our earth and classified as a natural fossil resource).

All the items listed are additional items of physical wealth. Value and Price are NOT wealth, however.

The barrel of Oil is different from that which we call the ‘Value’ of oil. Under Capitalism we use a TOOL called money to VALUE our barrel of oil. Value derives from the human MIND (spirit). To denominate Value, we use a currency unit (such as our dollar). Today, our $ also derives mostly from the human MIND (spirit). Let’s break these three concepts down for understanding.

Historically, under Classical Capitalism, currency units were physical items (obtained from our earth). This made Valuation of wealth more logical and realistic. Today, however, these physical units (currencies) have been replaced with virtual/imaginary units. This has changed the game of Capitalism and created price distortions and price manipulations. To understand this change we need to THINK in Dualistic terms.

1. The barrel of Oil is a physical item of Wealth. Within Science we call this item  matter/energy. This barrel and the oil within comes from our planet (not the human Mind).

2. The Value of this barrel of Oil, however,  is subjective and derived from the Human MIND. Value is NOT matter/energy. This is important to understand. Value is a subjective concept of our Mind’s.

3. To denominate Value we use a currency unit (say the dollar). Today, this unit is also NOT matter/energy (it is a unit of Consciousness). This means that Prices can be manipulated whereas the barrel of oil is a Constant.

What does this mean? This means that we can and should differentiate between the barrel of Oil and the Price derived for this barrel of Oil. The Price of a barrel of Oil is subjective and derived (within the human Mind prior to denomination). What is happening today due to QE and other monetary manipulations by our Central Authorities is a DISTORTION of values and prices within the greater marketplace. This is possible because our MONEY (digital currency units) are now imaginary and part of our Dualistic MINDSET (not the physical coins and paper of the past). In other words, there is a DIVORCE (decoupling) between the item of ‘wealth’ (oil) and the price/value of that item (expressed and denominated via imaginary money units). Who is aware of this?

All the QE creations by Bernanke, et al will not necessarily create real physical WEALTH. The creations of digital units may flow to non wealth producing sectors (say political, religious, scientific, or similar groups). These groups and sectors may not be producing any real PHYSICAL wealth (goods). Governments are growing today as those in power (especially our Central Bank) desires to promote ‘spending’ without a clear focus upon how the currency units are being used. Is real physical WEALTH being produced? Is manufacturing growing with increasing exports of goods? Is farming growing with increasing exports of farm products. Are retail stores producing more items for personal consumption? What is the role of MONEY today? What is its PURPOSE? Has our ‘money’ become divorced from our physical Wealth?

Personally, I think we need to get back to FIRST PRINCIPLES. What is Wealth? What is Value? What is Money? What is a currency unit? What are prices? Do we understand what we are doing domestically and globally as we create and manipulate our markets?I doubt it! That is my missive for today. Enjoy! I am:

2 Comments leave one →
  1. July 30, 2013 2:12 pm

    Wealth derives from our planet (its resources). D



  1. Creating Wealth Does Not Happen By Accident – A Definition Of Wealth | Letter From Kenya

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