There’s a big difference between money and currency, yet the terms a widely interchanged. Do you know what you are spending or saving?
Written in our early Constitution in Article I, section 10 reads “No state shall coin money, emit bills of credit, make any thing but gold and silver a tender in payment of debts…”. The reason is, because there is a fixed supply and it can’t be recreated for inflation.
What does the US Dollar qualify as?
- Is it money? – NO!
- Is it currency? – YES!
Warning About Currency
Money has a value that is controlled by the demand for it. This means that there’s a set and fixed amount available, and the people determine the value based on the need to have and use it. It’s value can’t be manipulated, because it can’t be recreated. Gold and silver are natural minerals with a fixed supply.
Here’s where the warning comes in. Currency, can be manipulated, because it can be recreated. Every currency that ever existed was, and/or is manipulated. That’s why a government wants to use a currency that’s under their control. It is a way of hiding taxation on the people.
Keep these facts in mind as you read the rest of this article.
Entrepreneurs AND Employees Be Aware
Our currency stopped being linked to money back in 1971 when President Nixon took us off the gold standard. He stopped the convertibility of the dollar into gold to stop bleeding off U.S. gold reserves. In one act of corruptness, Nixon stole from the entire world, because the US dollar was the only world reserve currency at the time.
Remember, all the other nations agreed to the U.S. dollar reserve status, because the US had the most stable currency. Is was tied directly to gold and could be exchanged for gold (gold which we actually had at that time), and at a stable rate of exchange.
Let’s step back a little further to get a wider view. Prior to WWI, all countries tied their currency to gold and held physical gold to back it up. In order to fund war efforts, countries had to abandon their gold standard, which steals the wealth of anyone holding that currency. Britain held out the longest as the most powerful financial system, but they only held on to their morals a few years into the war, and finally went fiat (fake money, not backed by anything). Why, because they spent the gold.
During World War I, the US was the leading manufacture of military weapons, so other countries had to buy our weapons and they had to pay using their gold (The US would not accept any of their fiat/funny money). This built the US gold reserves to be the vast majority of all existing world gold.
Now after the world countries having agreed to trust in the gold backed dollar, Nixon unlinked it from gold, and the dollar is worth about 2 cents of buying power today.
Is It The End Of The Dollar?
Why does this matter you ask? To be a truly successful entrepreneur, you have to understand how money works. Through the debasement of our currency, we lose purchasing power constantly. Remember how the US would not accept other countries fiat currency? Well starting with Nixon, this fiat currency debasement is exactly what we have been programmed to accept.
The whole world is on a fiat system for the first time in world history! In fact, US federal law prohibits using gold and silver as a means of exchange! Individual states can override this law, and some do. However, not many citizens actually try this. People have just been programmed to use our fiat currency and that’s what they carry because it’s accepted everywhere (NOTE. Credit cards are based on fiat).
Our dollar is only worth less than 2 cents in actual purchasing power today, because of debasement. When our most recent gold standard was established, it took $35.00 to buy one troy ounce of pure gold. Today it takes $1,550.00 to buy one troy ounce of gold.
An ounce of gold still buys the same type of item it did back in 1971, so is gold really going up? Perhaps it is the debasement of the currency. A fiat currency is created by a government to have a second way of taking value from it’s citizens.
The idea of currency that is backed by (and tied to) a fixed amount gold and/or silver makes complete sense. The problem is that politicians can’t leave it that way. The people just may revolt if true government spending was disclosed. People just don’t like working their butt off and having someone else have access to their bank account to spend the largest percentage of it.
Bailouts and Deficit Spending, HURTS!
Look back at old news papers from 100 years ago or so, and you ‘ll be able to compare the price of similar goods. If goods were still produced the same way today, locally, the amount of dollars it would take to buy them would be about 98% greater.
Today however, we have a very connected world and can purchase very inexpensive products from places like China. Clearly, one of the U.S.’s major downfalls, is that we stopped producing products, and started buying products from other countries. We went from a Producer nation, to a Consumer Nation.
China is making great strides towards becoming the next super power nation. All they had to do, is copy what the United States did back in the industrial age (build things that other people buy). Incidentally, China has been buying up gold heavily for years and now has the largest gold reserve (just like the US did).
Think about your family household. Can you imagine how it would be possible to keep buying necessities to sustain life, without someone in the family going to work or running a business? NO! Someone has to earn, in order to spend!
The only way around this, is acting like the FED and printing money. But we can’t do that. If we do this, it’s considered counterfeiting and we go to jail. Recreating currency is reserved for the Federal Reserve.
Just another sneaky tax
The government creates the worst taxation on it’s citizens. It’s a hidden tax established by just printing more currency, doing bailouts, and raising government spending accounts. Again, it’s called debasement.
Most people don’t really know that currency is just created out of thin air. It’s because it isn’t linked to anything but the promise of perceived value. For simple math, imagine the U.S. starting with $1,000,000 in circulation. So if there was 10,000 citizens, they each started with $100. This amount accounts for the entire wealth of the U.S. . The government can only tax it’s people so much before they revolt, so instead, they just make more dollars.
Lets say the government goes to war, and they need to have weapons, but they have no money. They need weapons to win the war, so they print $500,000 to pay for them. Now there’s $1,500,000 in circulation. That means that each of the citizens $100, now only buys $66 worth of goods. The total wealth never changed. It was how many units the total wealth was divided into that changed. The citizens never had a choice.
The federal reserve doesn’t have money until they turn on the printing presses (or add a zero or 2 to the computer) and print currency. Our government has no money. They just take a percentage of your currency, depending on how you earn it.
They’re also in charge of borrowing the FEDs printed currency with just an IOU and then dispersing the currency where they feel it’s needed. Then that IOU is sold as bonds into the stock market, and bought up by trusting investors that bet that they will see a return on thieir investment. Other countries own much of this.
This is very a simplistic explanation, so don’t go GURU on me, lol. This is just to get the point across (so everyone can understand), that holding on to Dollars as a store of value (long term), is a fools game.
The Pace Of Print Is Killing Off The Middle Class
I remember back when I first started out as an entrepreneur. My dream/goal was to be completely debt free (This includes my house being paid off. Your home’s debt doesn’t make you money, so it’s bad debt! More on that here), and have $100,000.00 cash in the bank.
If I could just make that happen, I WOULD BE SET FOR LIFE! It wasn’t long before I made that a reality. This is before I understood that currency isn’t money. I soon realized that my dream should not be a fixed number, but rather, an ever-moving target.
It’s important to know these things, so you understand that putting your currency in the bank, or letting it just sit under your mattress, is a loosing proposition. Your dollars have to keep making babies. You have to keep those dollars working in an investment so you have growth that hopefully outpaces inflation/debasement.
Is Any Currency Still Money?
Again, for the first time in history, all currency across the globe, are fiat currencies. Meaning that they are not backed by anything and can be debased at the will of the issuer.
The fact is, that the US Dollar is the main reserve currency. This has allowed the US government to pay it’s debts to other countries with newly printed currency (Wouldn’t you love to be able to turn on your printer to pay your bills with “funny money”?).
How can we do that to people
Going back the the 1960s and 70s, wise nations were rapidly turning in their dollars in exchange for the US gold reserves, because they could see the US having more dollars in circulation than what was agreed. This is when Nixon took gold off the table.
Reserve status was almost lost a couple years later, until the US negotiated that major oil producing countries will get the protection of the US military if they agree to sell their oil, accepting ONLY US DOLLARS (coined the Petro-dollar). This put the world in the position of needing US dollars again, so they can buy oil. This is beginning to crumble today as China and Russia are doing trades “not” based in US dollars recently.
Don’t mess with the U.S.
The U.S. is very powerful, for sure. You may remember when Saddam Hussein thought selling oil in Euros, was a good idea. He decided the world needed to get out from under the U.S. dollar, and he would lead the way.
You can do your own research on the subject with Google and decide if justice was served. We don’t express an opinion on this. We encourage you to also learn from other resources to form your own opinion.
I know enough to realize that currency is NOT money, nor a store of value! There are much better places to store your wealth. However, the government is bigger than you and you will have to use currency to buy and sell goods and services.
Time is Money
Time is money, because you can’t recreate (make more of) it. It’s also pretty hard to go to the grocery store and pay for your food with your time (just like you can’t pay with gold or silver), so you need currency. Remember that your time is also a fixed amount. You just don’t know what it is, but is is incredibly valuable. Most likely you trade your time to your employer in exchange for currency, so you’re in reality trading money for currency.
Profit Vs Wage wants to help employees to begin to think differently about money and currency, so they can prosper financially and start to control their most valuable commodity, TIME. Wait! What? How does time fit into this discussion? Once time goes by, you can never get more of it. Everything else is replaceable. Even if you lose money (which you should never do), you have the ability to produce more of it through your efforts. So time must be protected from being stolen by others. Ever heard the phrase “Time Is Money”? Well, it’s true and I just want to take a quick second to push this idea on you.
The use of your time is worth more than anything else. If you knew that you would die in 10 days, what becomes most valuable to you? Your TIME! The only reason most people don’t put a high enough value on their time, is because they don’t know how much of it they have. They don’t know when it ends.
They actually try not to think about it. That’s why very few people actually put a plan in place for their own time, long term. It is almost impossible to reach a goal without a plan. For me personally, I don’t want to limit my opportunities by selling off my most precious commodity to an employer. I want to control my time and get the most value from it.
Who Controls Your Time?
I prefer to control my time, rather than place the decision of my time usage to an employer. Having more Passive income coming in than is going out, allows time freedom. Passive income is the type of income that you make an effort once and the income comes in long term without further effort from you (or at least very minimal).
Employment limits that possibility, because your TIME is purchased by your employer/owner. They own that time for a set price, so that price figure is your limit. Not only that, but once that time is up, you have to sell them more of your time in order to pay your bills next month. It’s a vicious cycle of selling your most precious commodity, over and over, because it’s not Passive.
When you control your time, you control what happens during it, meaning that you have unlimited potential during that time based on your choices. With that said, I would assume that there are some employees thinking “Hey, I have a 401K that can make money without my effort”. That could be true in some cases, however, we want you to see the possibilities of having an unlimited potential as an entrepreneur.
There are a LOT more “tax deferred” options as an entrepreneur anyway. If you’re a real estate investor, you could pay zero taxes during your life. Your hours that you still own could be used to create more, as well as gain the knowledge to invest, which multiplies your efforts tenfold.
Back To Our Scheduled Program
So basically, currency (now fiat currency) can and will be manipulated and debased. The value per unit will absolutely shrink. Money on the other hand is considered fixed and stable, having a constant number of units in circulation, which allows it to maintain a more stable valuation. If you have a fixed number of units (supply), then the natural laws of demand, controls value.
Think about Bitcoin. There will be only 21 million Bitcoins in the supply once all Bitcoin are mined into existence, so the value placed on each coin is based on demand and demand only. Yes there are forks, but actual bitcoin is limited.
Similarly, gold and silver have a fixed amount in existence. Yes, some of it is still in the ground, and in the case of silver, some of it gets destroyed, but there is still a fixed amount. That’s why the constitution states gold and silver to be the only real money. They couldn’t have predicted Crypto-currency at that time, so who knows what they would have said about that.
Modern day governments are threatened by Crypto, because they haven’t figured out how they can manipulate and debase it yet. How amazing would it be to have a stable money system that the whole world used. No currency conversions and exchange fees. Easy and understandable transactions anywhere in the world.
Well forget it, because governments need to steal from their citizens in multiple ways to pay for operations/overhead/government waste/etc., so I don’t think that will ever happen. If all taxes were able to be seen buy the citizens, we could have a stable currency. However, governments don’t want us to know how much we each pay and for what.
Wrapping It Up
I got off track here and there in this short article, but understanding the difference between currency and money, and how this all ties to your need to keep your currency working for you is vital. I do hope my rambling helped give you a better understanding of what money really is, and that you continue to research ways to put your currency to work for you.
So, one last thing. I want to repeat an important way of thinking about your dollars:
- So, you need to consider that each of your dollars, is your employee. Your employees work for you and you definitely don’t want them sitting around, or sleeping on the job! You are their boss/owner, and it’s your responsibility to provide work for them. Do your research on all opportunities you find to see if they fit within your values and risk tolerance. When you find a winner, assign your employees to get to work. While your employees are working, you get back to creating more employees, doing what you do best as an entrepreneur. Here’s another cool thing. You continue to get better at your business, as well as having more and more employees (dollars) working for you. Now that’s exponential growth at it’s finest.
Now you can easily determine whether it’s money or currency? Thank you for reading this post, I hope you gained a new perspective. Now it’s important to set a great example for your kids and find ways to teach them these realities. It’s imperative to transfer these lessons in a way your kids can understand, but I’m sure you’ll do great, because nobody knows your kids like you do.
