Capital

thought 71

Let’s talk about money for the moment.

Money is one of those subjects that a large portion of the population try to avoid and for good reason. Depending on what side of the fence you’re on you can be exciting or super depressing.

Capital is essentially letting money do work for you. The concept is pretty simple. If I have a lot of capital, I can sit back and allow it to make more money day in, day out. But how does this really work?

Throwing out the absurd private company called Federal Reserve that prints our money for a fee concept, money represents, as Adam Smith points out, work. It’s an exchange for an agreed upon amount of work. If you get paid more money for 1 hr of your time, it means your work is technically valued higher in our society than someone that gets paid less.

This makes a lot of sense and is pretty cool except when you introduce the concept of interest. Interest is just a percentage applied to principle over time. Where things start to fall apart is when you realize that interest applied to capital is a exponentially increasing equation while work is a finite resource. You can’t apply interest to work so it will never be able to keep up with capital. Work will always be it’s slave.

Another problem comes to play when you realize that you can make large amounts of money doing nothing but moving capital around to ventures that make money. This is one of the highest playing jobs our society offers because it requires the least amount of man hours for the highest return.

I really don’t know how to end this article but I wanted to point out how money with interest will always be at odds with people who work for some type of wage. You’ll forever be stuck chasing the cart instead of riding in it unless you learn how capital works.

stay tuned.
Sterling