Money versus Wealth

Easy: Money is the Ghost of Wealth.

First of all, let me make clear that I am talking about Fiat Money. I am not talking about things like gold, silver, coins of any kind, shells, or cattle. All those things can be put to many uses, and "money" is just one such use. And none of those things can be created instantly, effortlessly, and in unlimited quantities. But Fiat Money can be.

Confusing gibberish? For the longest time, from the beginning of History or possibly before, up until the beginning of the 20th Century, gold, silver, and cattle have been wealth AND have been used as money. Wealth and Money have been near synonyms. So telling Wealth from Money should not be that straightforward. But let's contrive a few situations:

You are stranded in a lonely island, with nothing but a good cow. King Midas happens by, touches your cow, and leaves. Now you have a cow made of gold, which should be several tons of gold, given that gold is almost twenty times as heavy as beef. Are you better off? And, do you feel wealthier?

Next, you are a farmer in a remote farm in Kansas, contentedly watching your cow graze contentedly. A wealthy visitor offers to buy your cow for a rather good price. You have the choice of taking payment in crisp US Dollar bills, or in gold dust at the current market price. What do you choose? Would your choice be different if you were a farmer in a remote village in Iran? Eastern Siberia?

You are about to take a long trip into the unknown future (let's say 3,000 years beyond the present time), riding the newest Space X gizmo. The fuel tank capacity is limited to a one-way trip, and if you ever want to come back, you will have to buy the required fuel at your destination. Would you choose to take your money in gold bars, or a cashier's check denominated in Argentinian Pesos be acceptable? How about cows?

We can continue this game, but I am going to bail out because I have never found a good end point. That's why I keep on gazing at Money. But before I abandon you, let me warn you: I have never found any benefit of Money (Fiat Money, that is) that does not depend on some "other people" cooperating to make that benefit available to me.

That is the key. I could milk a cow or use a gold bar to kill a frog. I could burn a stash of Dollar bills to try to stay warm through a cold night. But the balance in my savings account is utterly useless without some nice people willing to give me some food or shelter or whatever I need in exchange. That is the key difference between "Fiat Money" and anything else we normally include in "Wealth".

Fiat Money has no substance in itself, no materiality. That's why I say that Money is the Ghost of Wealth. While humans have evolved and cherished the concept of Wealth since time immemorial, Fiat Money is a recent invention and has been viewed as Wealth for lack of a better concept, but it ain't quite the same thing. It is more like a ghost of the thing.

I get spooked when I meet ghosts. And can not stop gazing at them. Can you?