On the most misunderstood word : "rich".
Par Julien le dimanche 21 octobre 2007, 15:12 - Lien permanent
Among words between us, I came to think that the most misunderstood is "rich".
Let's try to clear some about it.
1) You can never tell whether you are rich.
This seems to be possible but it's not. Not because you are stupid or I want to negate the word, but just because of grammar ! "Rich" as tall or old is an adjective, a kind of word men made to compare 2 ones with each other. Think about it. For tall, we're using meters to compare. For old, we're using years. For rich, there is one most seen than others : that one is known as "money".
2) You can always tell whether you are richer than a person.
Yes, when that person has more money than you, he is richer than you.
3) Telling it with "poorer" or "less rich" is moral tactics.
Telling that you are poorer than me is exactly the same that telling you are less rich than me. But the first will be better to touch persons' heart and convince them to help you. Good tactics.
4) Richer is better.
Not big news here. With more money, you may get more goods.
5) There are 2 plans to get richer.
Plan A : You can get more money. Plan B : You can give less money.
6) You can do both at the same time !
Hard ? Easy ! Let's say that you have no money : a) you are giving a good you made for 120 in money. For 120, only one person gave it to you. b) a person is asking 120 for a good you want. you gave the 120 for the good. After these, you have a good but not much money.
Let's now say that later : a) you are giving a good you made for 80 in money. For 80, two persons gave it to you. b) the person you once gave 120 made the same and is now asking 80 for a good you want. You gave 80 for the good. After these, you got 160 for what you made, or 40 more, and you got the good for 80 or 40 less ! So, you have a good and 80 in money. You won on both ways !!
Where's the trick, you may say ?
7) Persons can shrink the time to make.
Aesthets will use the more complex word "productivity" but that is what it is. With organization, tools, machines, thinking or whatever, we are shrinking time. So you can make at once more and more and thus ask less money per one, sell more and get more money. The trick is when you can sell twice more before asking twice less money, what an aesthet would name how elastic the demand is.
There is also a variant of this.
8) As cheap but better
That's basically a variation. You give the same money again and again to get better and better. Intel or Free are making a lot of money with this simple approach. For the same quality, you would give less money.
All of these seem simple ? Yes it is. But there's a but.
9) Which one to be money ?
To see it, remember this : the more goods for the same money, the cheaper they are. That's the heart of why Plan B is working. For this to happen, there should be the least more money, or to say differently it has to be scarcier. Men tried many goods to be money. They eventually agreed on one, it was Gold.
10) From Goldsmiths to banks.
The only problem with Gold, as with money, was when someone wanted to steal yours. For this, some people, known as goldsmiths, once proposed to persons to keep Gold safe. For a person to get back his Gold from them, goldsmiths were writing it on a paper. A person could thus leave his Gold at a goldsmith in say Paris and give the paper back to a goldsmith of the same family in say Florence, to get his Gold back. Soon, goldsmiths, once Gold safekeeper, became known as "banks".
11) From paper for Gold to paper for nothing.
The revolution came once goldsmiths saw 2 things : a) More and more persons were not giving Gold to each other but instead the PAPER for it. b) Few persons were giving back the papers at once to get Gold back. So the occasion was too sexy : i) Goldsmiths started to make more papers than the ones for Gold, that is paper for nothing. ii) Goldsmiths started to LEND these papers as money to persons.
12) When Gold was here, the risk to die limit the number of papers.
With gold, the strategy of banks was risky. When too many persons were not trusting a bank making too much paper, they could always go to the bank to get Gold back. when too many were doing it at once, the bank died. The fear of dying was preventing banks to make too much paper.
13) A murder in 3 acts.
Knowing this makes you understand why banks did not love Gold as money. So they looked for a way to kill Gold. Unfortunately, they found the strongest ally in their quest, states. As you may know, persons in a state have 3 ways to get more money : i) Force persons to give more money as taxes. ii) Borrow money from banks. iii) Make more paper and tell that this is money.
The 3rd is the best for them because most of people do not see the consequence.
But Gold, as for banks, was a serious danger to the plan. So, some banks and states decided to murder Gold as money.
Act 1 : in 1910, on the Jekyll Island, in USA, the biggest banks and persons in Congress acted to create the Federal Reserve, for banks not to be killed by making too much paper and for a state to be the first to get the money from nothin. Act 2 : in 1944, at Bretton Woods, profiting from post War climate, every link to Gold as money were broken except for papers for dollars. Act 3 : On the 15th of August, 1971, Richard Nixon broke the link between dollars and Gold.
14) Where is the problem ?
Remember the rule : the more goods for the same money, the cheaper they are. Reverse it, it's still working : the same goods for more money, the more expensive they are.
With dollars alone and the power to MAKE money from nothing, there are no limits to more money.
So with time, you have exactly the reverse of Plan B : you're getting less and less goods for your dollars.
15) Epilogue : it's up to you to call back Plan B.
If you're still there after this long speech, I hope you understood a bit more. It's up to you to revive the plan B to get richer. I hope you will now want, as me, to murder dollars and get Gold back.