What is the true value of money? There are people in the financial industry who are fond of saying, “If money isn’t the most important thing in this world, it ranks way up there with oxygen.” To those people I would respond with Hamlet’s admonition to Horatio: “There are more things in Heaven and Earth than are dreamt of in your philosophy.” The truth is that anoxia, a total lack of oxygen, leads to the death of brain cells within five minutes and if the condition persists, leads very shortly afterward to death.

And what is generally the most important use for money? It is to acquire physical nourishment — food and water. The human body can survive for more than a month with water and no food but it can survive less than half that time with neither food nor water. Still, that is an order of magnitude longer than survival without oxygen.

Imagine yourself alone on a desert island with a trunk containing a billion dollars. There is nowhere on the island for you to spend your money and nothing you can buy. What, then, is the value of your money? If you have a needle and lots of thread, you might stitch your currency into a blanket or a mattress to sleep on. Or, if the weather is cold, you might set the money ablaze to keep warm, but that won’t last long, the blanket is probably a better idea.

But you still require nourishment to survive. You can’t eat your money. You could find edible wild plants or pluck fish from the surrounding sea, but both of those activities require knowledge and skills and you cannot buy knowledge and skills on a desert island. In such circumstances, the value of your brain far exceeds that of your money. You will probably have to employ methods like observation (what do the birds eat) and trial and error to acquire the knowledge and skills essential to your survival.

Mankind existed for many generations before money was invented. Before the advent of money as a medium of exchange, individuals and families survived by their own efforts. Eventually, barter was invented to permit the direct exchange of one type of produce for another, and it wasn’t just material goods that were exchanged, one person could work to help another, in the planting and harvesting of crops, for example, and expect to receive part of the harvest for his efforts.

And before the invention of money, capital was measured in accumulated goods such as rice, corn or wheat. I mention these organic goods because they share something in common — they deteriorate over time and gradually lose their value with age. Inventions like silos and refrigerators helped to retard that deterioration somewhat. And as we learned during the Dust Bowl of the 1930’s, even the land, itself, could lose its value to produce these goods. Money also loses its value with age; we call that “inflation.” We learned to extend the value of our farmlands, by means of crop rotation, careful irrigation and the application of fertilizers, and similar methods, such as expansion, diversification and risk management can be used to manage our wealth. But without more general controls over the rates of interest, money still tends to decline in value, and placing it under your mattress or in your freezer won’t help.

In the mid 1960’s, when I returned to the United States from Vietnam, the print and broadcast media were awash with stories about the frenzied behavior of traders in the stock markets, and the rapidly increasing wealth of financiers. The news was almost invariably about increasing wealth and relatively little was said about concrete improvements in the quality of goods and services. Instead, the emphasis was on the obsessive behavior of the traders. I was reminded of the feeding frenzy of sharks and coined the term “thrashing” to describe the behavior.

Management of one’s income, no matter how meager, is less stressful than pursuing more and more money which may be very tenuous and frought with risk. Yes, risk, on the stock market or at a casino table may be very exciting, up to a point, as may an obsession with drugs or with alcohol. But beyond that point it becomes very stressful, and by the time one discovers that, it will probably be too late.

When Henry Louis Gates Jr. and his colleagues set out to uncover Oprah Winfrey’s genealogy, they also learned something about the relative value of money. During the slavery era, since slaves were legally regarded as chattel, they had to be declared, along with land, buildings and money on deposit for taxation purposes. When Gates, et al, added up all of the declared assets during that period, they found that the declared value of slaves exceeded the sum of all other assets combined. That is conclusive evidence that all value derives from people. Crops have no value until people harvest them. Similarly, even gold has no value until miners extract it from the ground and refiners process it; and it accumulates even more value when artists and craftsmen create jewelry or other objects. And the satisfaction that those artists and craftsmen experience does not derive exclusively from the money they earn, though it probably doesn’t hurt.

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