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May 21, 2018 | Emotion is not Wealth! Money is not Wealth!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

Today at the clubhouse we talked about digital markets which go up and up with no tie to material reality. Are you aware of a basic principle of economics. Wealth is not the digits we call money. Wealth is not an increase in digits resulting from an emotional response to words of politicians. Today, the Dow went up some 342 points (as I write) due to mere emotional responses to words about China and American trade policies. Does this represent at increase in real Wealth? Let’s think on this concept called Wealth!


I have been watching our digital/electronic markets for years as they fluctuate up/down but mostly up. We have now had some 109 months of generally up stock markets and this continues as I write. My friends at the clubhouse think that our wealth is growing as these money digits increase over time (as represented via our stock market). But is this a valid understanding of economics? Adam Smith, our first American economist, wrote his book called the Wealth of Nations on issues of economic principles.


His book states that MONEY should not be viewed as Wealth. Money is a ‘tool’ for the measurement of value and value was viewed as our increase in goods for the marketplace. Money measures both value of goods (prices) and simultaneously acts as an incentive for more production by workers. Wealth is this production (of goods) and money is merely a ‘tool’ to assist with production of goods. Money, itself, is not wealth, according to Adam Smith. I would agree. This is a basic principle of economics.


When a money unit (say our dollar) is tied (via definition) to material goods (say gold) then money measures production better than today’s money. Today we have no definition for our dollar and this unit is now a mere ‘name’, ‘number’, and ‘symbol’ in the computer screen. This type of unit can be pumped up by computer trading even as our real wealth (goods) does not change. Why? There is no ‘tie’ of today’s dollar to anything physical. This makes this unit (today’s dollar) artificial and imaginary.


What my friends at the clubhouse seem to miss is that a continuing increase in stock prices (via computer trading) does not necessarily mean that the real economy is improving. Goods may not increase as computer digits get pumped up via trading activity. Algorithms and robots can increase the digital stock prices without any real production taking place. We see this in spades over in Venezuela. The Caracas General stock market goes up even as the wealth of Venezuela goes down. This has been the situation for many years.


Increasing stock markets may partially reflect an increase in real wealth but they also may reflect mere emotion and digital pump priming by our computer traders. Central Banks, for example, can trade our markets to pump up the stock digits even while the general economy is worsening. This manipulation of the digital prices gives people a ‘wealth effect’ (mentally) but this may also be fantasy. Digits, these stock market indexes, may not reflect the real economy. Real wealth may not be growing at the same rate as ‘digits’ grow in the electronic stock markets.


The problem with today’s money is that the money units have no ‘tie’ to material reality. The units are cyber units which represent nothing material. These units are mere ‘names’, ‘numbers’, and ‘symbols’ within cyberspace. This gives a false reading of reality and economic growth. Venezuela is a good example as the stock market over in Caracas has crashed (2017) and is now on a new growth path while simultaneously the general wealth of this nation is declining and the people are experiencing a depression.


The real problem today is our money. Money is not wealth. Money needs to be ‘tied’ to material reality if it is to work for measuring our goods economy. Our dollar was originally tied to silver/gold via a definition. Today, there is no ‘tie’ and mere digits get created as representations of value. This is fantasy, when understood. Our global system is now operating on fantasy and fake money units. This will not last much longer. Think for yourself and do your own research. I am:

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May 21st, 2018

Posted In: Kingdom Economics

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