Personal finance and government regulations
Part 1: Who owns the money?
Contrary to what is commonly believed, you do not “own” your money. Money is a government created and regulated commodity. While it is illegal for you to print your own currency, everyday people create “money,” when they create profit. The government recognizes the difference between currency and profit, and it taxes your profits rather than arresting you. You do not need to be in a business to generate a profit. When a laborer works for somebody else, his labor generates a profit called “income.” Different terms have been created to describe profit, based on how it is created. All money originates from profit, and the government constantly regulates it.
It is important to recognize that the government and the people both behave similarly in regard to the creation and regulation of money. Even when the government spends money it does not have, it is not behaving differently than individuals who regularly go into debt to purchase homes, automobiles, etc. Every organization has the same infrastructure needs as the individual. Personal finance, business overhead and government regulations are intimately linked.
The government is like a balloon. Any pressure at one point will divert the pressure to another point. The government passes laws to regulate the economy, with the hopeful desire that everyone and every organization will thrive, but most laws are primarily written to adjust the effect of previous laws. The government is in a perpetual state of crisis management, trying to regulate the currency that it created.
Democracy gives everyone an opportunity to petition the government for relief of burdens created by the currency, but it is important to note that the currency system under democracy is the same as it has been for thousands of years. The American Revolution is part of a wave of political change, but the underlying economic philosophy was unchanged. New faces adorned the money, but money remained a government created and regulated commodity. Communist and Islamic revolutions made similar political changes regarding who and how decisions would be made, but the underlying concept of money also remained unchanged.
There are two powerful abstract ideas at work in the world. One is the belief in the existence of God, the other is the belief in the existence of money. Almost everyone believes in the existence of money and that they “own” it, but money is just a form of barter. Money has no value unless other people accept it. Money is an intellectual agreement. It is real because we believe it exists.
The purpose of money is to serve as barter. Trade is necessary for everyone to survive. Money allegedly makes the distribution of goods and services easier. If the distribution of goods and services is difficult or unfair, then we should see that as a symptom of a mis-regulated currency. While the political process can give everyone a chance to vent their grievances, the more difficult issue is what has caused the problems. Problems are easily observed; they present themselves. Solutions, however, require a certain amount of dilligence. Treating the symptoms will never lead to a cure for the underlying disease. That is why it is important to recognize that we do not “own” money.
At its simplest form, the economy is a distribution system. We work to produce what others consume, others work to consume what we produce. While everything originates from the Earth for free, man must add his labor to fashion the natural resources into something useful. Distribution within the economy should not be measured primarily by money or production, but in terms of labor. Because the Earth is large, certain resources are found in various places. Trade is in everyone’s best interest, but what we are trading primarily is labor, not goods. Governments exist to facilitate trade both within and outside of a country. Money was created to make the trade easier. If trade is not working well, people tend to both blame the government and look to the government for relief, but what we really need to know is how does the economy work. We cannot fix a system without properly understanding how it works.
The primary failures of a mis-regulated economy are war and poverty. When the labor of one nation is spent on destroying the productivity of another nation, this should be seen as a catastrophic failure of trade. Sanctions precede war because a trade war is an act of war with money as the weapons. Both sides in a conflict believe in money and war and that God favors themselves. Likewise, poverty should be seen as a failure to regulate labor within a country wisely. As we know, poverty and war have been a part of every nation’s history. Money has always been mis-regulated and misunderstood, and therefore the history of men is about the use, misuse and abuse of labor and money. History is a crime scene where everyone is a victim, not just for slaves, but for the slave-masters, too. The mis-regulation of the currency makes everyone miserable, high and low. The rich live in fear, the poor live in poverty. The same forces that make men rich also conspire to make them poor. Fortunes that can be made overnight can fade just as quickly. The cycles of boom and bust are not random events, they have an underlying mathematical formula.