Category Archives: 02. Money and Wealth

What Is Inflation, Really?

“All the perplexities, confusion and distress in America arise, not from the defects in their constitution or confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.”
John Adams, letter to Thomas Jefferson,
August 28, 1787

When everyone is honest, bankers, government workers, wealth creators, and taxpayers all benefit.

But what happens when people are less than honest?

Let’s follow the thinking of the goldsmith on Silver Island, who sees things just a little different from the goldsmith on Gold Island.

Like the goldsmith on Gold Island, the goldsmith on Silver Island creates paper notes (IOUs) to represent the actual money (gold and silver) that people deposit with him.

The amount of the notes exactly equals the amount of gold and silver coins he has on deposit. If there are 100,000 oz. of gold and silver on deposit, there are notes equaling 100,000 oz. of gold and silver in circulation.

How much money is there in total?

If you answered 200,000…
No! No! No!
The total is still only 100,000 in money.

Only the gold and silver coins on deposit are money. The paper notes are symbols of that money.

Paper notes are NOT money.
They are currency.

But the goldsmith on Silver Island notices that almost everyone who uses the paper notes thinks of them as money. Some people almost never come to redeem their notes for actual money.

They are happy to use the paper notes for trade and payment.

Workers begin asking employers to pay them in paper notes rather than gold and silver coins. The workers know they can trade them in at any time, but why bother?

Paper notes are so much more convenient to carry.

The Silver Island goldsmith then has a crafty idea.

What if he printed up extra notes?
And spent them?
Who would notice?

You can see how tempting it would be to the goldsmith who is normally honest, but who suddenly has a medical expense.

Remember, this is Silver Island. The people here are a mix of good and bad. Sometimes they know it, and sometimes they don’t.

On Silver Island, some otherwise good people can rationalize something bad as being good.

The goldsmith’s child needs help and he is short on money.

Why not just “borrow the money” now by printing up a few extra paper notes to pay the doctor?

Then just pay it back later by destroying the other paper notes when he collects his storage fees?

No one would know. And besides, it’s good for the child.

So the goldsmith does print up the extra notes. And nobody notices. And the child gets better. And the goldsmith pays back the “money.”

What he does is a good thing, right?

As time goes by, the goldsmith rationalizes other bad actions as being good.

Why not print extra paper notes to buy better food, pay someone to rebuild the fence, and get his wife a nice gift?

He figures that since nobody notices, why should he even pay it back?

He works hard for a living. So what if he has a few extra nice things. Nobody notices. Nobody cares.

Soon for every 100 oz. of gold stored, there are notes circulating for 110 oz. of gold.

And prices around town
begin to mysteriously rise.

What the goldsmith on Silver Island does not realize, and almost everyone else as well, is this:

When more paper notes are “spent” and put into circulation, merchants notice that more goods are in demand.

When demand rises, the value of what people buy rises, and therefore merchants naturally charge more.

More paper notes = Rising demand = Rising prices

Supply and demand. Cause and effect. Choice being exercised in a free society.

A year later, the goldsmith on Silver Island decides to support another islander for election to the local council.

Together they hatch a scheme to outspend their opponent. The goldsmith prints up a lot of extra paper notes and donates it to the candidate’s campaign.

Because, you know, his opponent has bad ideas, so the extra paper notes are really a good thing, you know, for the good of everybody.

More notes begin to circulate as the candidate spends the extra notes for political influence.

And prices mysteriously rise.

The candidate is elected and begins putting pressure on the goldsmith. Print up more notes so that the government can hire extra people. And spend money on community projects.

The goldsmith does.

And prices mysteriously continue to rise.

Who is to blame for the higher cost of living?

The politician blames the greedy merchants. And the merchants don’t know what to say. They do not understand the real cause of the rising prices.

But the merchants, and actual creators of wealth, continue to be called greedy and uncaring.

They do not realize that the rising prices are a natural result of the inflation.

What is meant by inflation?

You know what happens when you inflate a balloon. As more air is pushed into the balloon, the amount of air increases.

What increases when you have economic inflation?

The supply of paper notes (currency).

Government, and people who make a living off of debt, will tell you that inflation is rising prices, just a natural force of nature, without anyone causing it.



Inflation is NOT rising prices.
Inflation CAUSES prices to rise.

As the currency supply increases, prices are forced to rise.

If you think the definition of something makes no difference, then you are a good target for con artists.

What if I can plant the idea in your mind that inflation is merely the rising of prices?

I can keep you from seeing the cause-and-effect relationship between printing paper notes and rising prices.

And if I can plant the idea in your mind that government debt is a good idea, then government can continue creating money out of thin air.

To do what?

To finance projects, wars, entitlements, and many other government “goods.”

Who pays?

Workers who create wealth and become taxpayers are the ones who pay. Not the ones whose income is paid out of tax money.

The bankers and politicians on Silver Island soon tell the public that they have to withdraw gold and silver from circulation.


Because there’s not enough to go around, and besides, the paper notes work well as money.

And almost everyone believes them, except a few kooks who talk about some kind of conspiracy between bankers and politicians.

But nobody really believes them.

from Money and Wealth

2. Money and Wealth thumb


What Is Wealth?

It’s not money that makes life better, it’s wealth.
You don’t have to have a lot of money;
you want wealth.
Richard Maybury, Early Warning Report, June/July 2008

What is wealth?

If you answered “Money,”
Bzzzt! Wrong.
Thanks for playing.

Money as it exists today can be a sign of wealth. It can be used to measure or trade wealth.

But money is not wealth. Knowing the difference can make all the difference in how you choose to make a living. And how you choose to view people with wealth and those who want your wealth.

Later, we will talk about what real money is. First, let’s look at wealth…

Here’s a clue:

If governments could create wealth,
they would have no need for taxes.

Wealth is goods and services—food, clothing, homes, tools, auto repair, plumbing services, literature and the arts, entertainment, personal and professional skills—just about everything that makes life better is wealth.

Money makes trading wealth easier. I can use money to specify the value of my professional skills and physical work in relation to the products you are selling.

A monetary value can be placed on goods and services; therefore, money is one method of measuring your wealth.

Money can also predict your ability to acquire wealth. If you have a wage or salary, you have an idea about what kinds of, and how much, wealth is available to you.

But money itself is not wealth.

Let’s break it down…

Imagine three small islands, each with a village of about 100 people:

  • Gold Island
  • Silver Island
  • Iron Island

The people on Gold Island are, by nature, good and ethical people who trust each other. They appear good, and are good inside. They all have to work hard just to survive day to day.

They live by a high standard of ethics.

The people on Iron Island are just the opposite. They are bandits and pirates: dishonest, ruthless, manipulative, selfish, and dangerous. They appear bad, and are bad on the inside.

In other words, they are openly bad, and do not care who knows it. They form thieving bands that believe in “honor among thieves,” mostly. They do not want to work hard to survive. They enjoy taking from others who do have to work hard.

The people on Silver Island are a mix. They are inherently both good and bad, and everything in between. Some of them can appear good, but be bad on the inside. Some of them are good on both the outside and inside in some situations, but not in other situations. They can work hard to survive, but cut ethical corners when the opportunity arises.

Let’s first focus on the people of Gold Island.

Each day in order to survive, each person on Gold Island has to catch one fish, get one coconut, and drink two gallons of water. It takes twelve hours of work each day on average for each person to get the food to survive.

Everyone barely manages to live.

One day, one man, let’s call him Tor, gets an idea. Tor labors extra hard to get an extra fish, an extra coconut, and extra water. He now has enough for a free day.

He spends that day inventing a fishing pole. He practices with the fishing pole until he develops the ability (the skill) to use it. The next day he catches ten fish.

This man, this inventorusing his imagination and creativity, and sacrificing for his visionjust created wealth. Specifically, labor-saving wealth.

Labor-saving wealth is created out of two things:

  1. A valuable labor-saving idea
  2. The work necessary to manifest that idea

Wealth is created out of
imagination and work.

Labor-saving wealth often saves people time,
freeing them from mere survival.
Wealth has inherent value to you or others.

Notice that money is not necessary to create wealth. If you have good ideas or good skills, you can create wealth out of your work, or out of the work of others.

On Gold Island, both the fish and the ability to catch fish are actual wealth.

Because our inventor, Tor, can now catch ten fish in the time it used to take to catch one fish, he has more free time. (Fishing used to take four hours; it’s hard to catch a fish in the ocean with your hands.)

He and his wife Sophia can now go several days without having to fish (if they salt the fish).

In fact, Sophia doesn’t have to fish or get coconuts anymore. Tor is skilled at getting coconuts (two hours on average to get one). His wife is strong, and willing to walk the six hours, round trip, to get enough water for them both.

Meanwhile, in his free time, Tor is fixing the roof and building an additional room, since Sophia is newly pregnant.

One day Sophia has a good idea. She’s been thinking of ways to get coconuts more quickly. Throwing rocks at coconuts works sometimes when they are overly ripe. But often, coconuts grow higher than her husband can throw. And the ones that are ripe will not always drop when hit by a hand-thrown rock.

Sophia dreams up the idea of a slingshot.

Working together in their spare time, they create the slingshot. They both practice until they have the skill to knock down ten coconuts in the time it once took to knock down one.

Tor and Sophia now have even more wealth, more time to do other things.

Wealth is one of the most important things anyone can create.

Wealth frees people from drudgery.
Wealth grants time to do other work,
or time to play.
Wealth is essentially good.

In other words,

Wealth grants freedom.

There are other kinds of wealth.

Ver is a great storyteller. He can gather the community together around a bonfire and begin telling tales of old.

Tales of monsters and heroes, and stories of great passions, both hateful and loving.

Ver has the extraordinary ability to voice many characters. He can act out the parts. Villagers from miles away will come to hear his stories.

Ver enriches everyone’s life with sorrows and tears, and laughter and joy, and all the passions his characters experience.

His tales provide moral examples of what happens to those who do right. And what happens to those who do wrong.

And because he is such a unique and wonderful storyteller, he becomes known as Ver the Great Storyteller.

The villagers are willing to give him food and drink and other goods in order for him to keep telling his stories.

People who are free from constant labor may write a song or a book, or may paint a picture that someone else wants. These provide pleasure. They may not create something that saves time and labor, but they may still create something that others want.

Something others value. Something that enhances their lives.

Great music, great art, great literature, great storytelling: these are all kinds of wealth that, when created with noble ideals, can uplift, improve, and generally better people.

Leisure-enhancing wealth.

When someone like Ver the Great Storyteller creates something that others value, they have created wealth. Not necessarily labor-saving wealth, but it is still a kind of wealth. It has value, or at least someone sees value in it.

Wealth has intrinsic value;
that is, wealth has value in and of itself.

Ten salted fish have value when others know that they have to work four hours to catch a fish. Even if no one else wants the fish I have, I can eat it. It has intrinsic value, not just an official value that some authority, like government, declares it to have.

The same is true of gold or silver. If someone has it, they can make jewelry out of it. The value is intrinsic, in the thing itself.

People use their imagination and develop skills to create, out of thin air in a sense, things with intrinsic value. Wealth. Both labor-saving wealth, and leisure-enhancing wealth.

Like debt, wealth is a habit.
Wealthy people realize
that life is more than luck.

Life is action. Life is imagination.
Active, hardworking people create wealth.


from Money and Wealth

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Evil Dictionaries

The genuine purpose of a dictionary is to preserve distinctions despite public misuse.

A good dictionary functions as a ruler, as a constant unit of measurement for meanings to help people acquire a flexibility and subtlety of language and thought, for deeper and common communications and expressions.

A good dictionary warns against such misuse.

An evil dictionary, on the other hand, will descend to affirming popular misuses, even to the point of deleting the original, correct usages. By evil, I mean that which breaks down structures and hierarchies that lead to greater freedom of thought, expression, and awareness.

Which word is correct usage for the following sentence?

“We expect his continual/continuous presence in class this month.”

“Continual” means repeated at intervals while “continuous” means non-stop. Therefore, continuous presence would mean he never goes home, night or day. This is a distinction worth preserving, but evil dictionaries will blur the distinction, calling them synonyms.

Evil dictionaries allow misuse to flourish and blur distinctions that are freeing. We live in an age that throws out hierarchies just for being hierarchies. Thus, many liberating structures are being reduced to rubble.

Manipulators of power want to blur the language, to keep people from using language specifically, clearly, and effectively because such people are easy to control. Clear and distinct definitions clarify reality, while unclear and ambiguous usage and misuse blur reality and keep people from seeing what is really going on. (“It depends on what the meaning of is is.”)

In other words, if I can get a blurred meaning into your imagination, you will not see past that implanted meaning. I can then get away with misdirection in reality, while you are blinded by the implant.

Let me give a politically manipulative example that you can use to immediately classify your dictionary. Look up the word inflation in its economic sense. If the definition given is only that inflation is “a general rise in prices,” then you have an evil dictionary. If your dictionary defines inflation as “an increase in the supply of currency (money or credit) that causes prices to rise”, then you have a good dictionary.

If your dictionary supplies both without warning you that the first usage is a popular misuse, then you have a partially evil dictionary. You see, there is a profound difference between the two definitions. Inflation is not “rising prices.” Inflation causes prices to rise.

There are people who want you to believe that inflation is merely rising prices in order to disguise the fact that it is the government or its appointed designees who “inflate the currency supply” (i.e., inject more money or credit into the economy making the value of all money to go down and thus prices to rise).

If you never knew that governments cause rising prices by printing up more money or providing more credit (to finance wars, foreign aid, parties), then congratulations. You have been taken in by a con game that has been going on as long as there have been governments.

Study Roman history to see how the Caesars did it. Have you ever wondered why so many old coins have holes in them? Once the treasury got low with all the big parties, Caligula, say, would require that the money (gold and silver coins) have their centers punched out so that the metal could be melted down and more coins could be made. And then a law would be passed requiring citizens to use the holed coins as if they still contained the full value of silver or gold of those without holes.

Of course, such laws failed, since the holed coins would immediately be devalued by merchants who raised their prices to account for the difference. One of the reasons why Greek and Roman history and the Greek and Latin languages are being removed from high school and college curriculums is that fewer students will stumble upon such truths. A deep study of Greek and Roman history and politics reveals starkly uncomfortable truths.

Of course, a good dictionary should supply the technical definitions as well as the popular reductions or alterations, but it should also make clear when there is a possible problem or potential confusion. That’s one reason I like the Oxford English Dictionary (which gives the complete history of usage) and the Oxford American Dictionary (which for example warns one not to confuse Continual with Continuous). (Of course, as you have seen with the link above, you can’t trust AskOxford.Com, a terrible irony.)

But the main point I am making is that a dictionary’s primary purpose should be to preserve real distinctions so that everyone has access to those distinctions. As you know, any elite group wishing to alienate the majority and consolidate power construct a technical language that allows them to talk above the heads of the majority.


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16 Golden Rules of Financial Safety

For the basic investor, one who does not have detailed knowledge of investments and cannot afford an experienced financial adviser, Harry Browne offers the best advice. You can get the details in his book Fail-Safe Investing: Lifelong Financial Security in 30 Minutes.

You can get a preview of his 16 Golden Rules for Financial Safety. Here are the headlines.

Rule #1: Your career provides your wealth.
Rule #2: Don’t assume you can replace your wealth.
Rule #3: Recognize the difference between investing and speculating.
Rule #4: No one can predict the future.
Rule #5: No one can move you in and out of investments consistently with precise and profitable timing.
Rule #6: No trading system will work as well in the future as it did in the past.
Rule #7: Don’t use leverage.
Rule #8: Don’t let anyone make your decisions.
Rule #9: Don’t ever do anything you don’t understand.
Rule #10: Don’t depend on any one investment, institution, or person for your safety.
Rule #11: Create a bulletproof portfolio for protection.
Rule #12: Speculate only with money you can afford to lose.
Rule #13: Keep some assets outside the country in which you live.
Rule #14: Beware of tax-avoidance schemes.
Rule #15: Enjoy yourself with a budget for pleasure.
Rule #16: Whenever you’re in doubt about a course of action, it is always better to err on the side of safety.

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from Money and Wealth

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Debt Is Slavery

Here are some of the quotes from Money and Wealth.

“Live within your means, never be in debt…when you get in debt you become a slave. Therefore I say to you never involve yourself in debt, and become no man’s surety.” Andrew Jackson to his ward, 1833

“The trifling economy of paper, as a cheaper medium, or its convenience of transmission, weighs nothing in opposition to the advantages of the precious metals; that it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.” Thomas Jefferson, letter to John W. Eppes, Nov. 6, 1813

“All the perplexities, confusion and distress in America arises, not from the defects in their constitution or confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.” John Quincy Adams, letter to Thomas Jefferson, August 28, 1787

“He that sells upon Credit, expects to lose 5 per Cent. by bad Debts; therefore he charges, on all he sells upon Credit, an Advance that shall make up that Deficiency.” Benjamin Franklin, Poor Richard’s Almanack, 1737

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The Entire Series of Books

Here are the 12 covers of the books I am writing. I will be publishing some of the material to come on this blog so you can get a preview of the content. If you want to buy one of the available books from Amazon, click on the cover.

And by the way, all you need is an Amazon account and a computer. You don’t need a Kindle or iPad or other tablet. To download a free Kindle Reading App, just click on THIS LINK.

Mark Alexander collection3

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