Here, I put down all my thoughts and principles around money.

These are principles I wish someone had taught me.

Money

• Money is a resource; a made up one.
• Money doesn’t exist in nature. It is a tool we developed to make it easier to transfer value while conducting trade.
• Instead of trading items and services directly, we get to store, lend, divide, and transfer value in the form of money.
• Money is a concept, and currency is its unit.

Market

• The sum of trade transactions and their pricing is referred to as the market.
• The market is a natural system. It came before money was invented, and is as old as two archaic men exchanging meat with fruit.
• The market is decentralized and cannot be controlled by any single entity.
  • It can be influenced by regulation, both positively and negatively, but never controlled.
• “The market always decides”; meaning that the nodes in the market collectively decide what happens to it with their economic activity.
  • The nodes in any market economy are based of supply and demand; sellers and buyers.
    • The buyer always sets the price. In theory, assuming no monopoly, if a seller doesn’t serve the buyer well, another better seller would emerge.
• Central entities regulate their market by printing more cash when it’s needed, while ensuring the market isn’t flooded with cash.
  • If people have a lot of cash, pricing inflation happens in the market, and sellers charge higher prices because buyers can afford it.
    • Inflation almost helps no one in the long run, because every person will need more money to buy the same things, making the currency unit less valuable.

Making Money

• You can make money in an infinite number of ways.
• The single common denominator for all of these methods is that another human with money finds what you’re doing worthy of monetary reward.
  • If you do something, and someone with money likes the service, likes you, or likes both, then they’re likely to give you some money.
    • If you reach to a lot of people like that, then you get to make a lot of money.
• The service or product doesn’t matter. If there’s a buyer, a seller is likely to emerge.
• Different people naturally have different genetic capabilities (physical, cognitive, creative)
  • The best way to make money is to use your unfair genetic advantages.
• Some people are born with more money than others from their families.
  • If such people don’t use their money productively, they will lose it.
  • Thinking “why does this person have more money” or “this person didn’t work for their money” is a waste of time, and an act of envy which leads nowhere but to dissatisfaction and resentment of others.
• Every natural system has unfairness, and trying to eliminate unfairness can be catastrophic.
  • Having hierarchies of competence incentivizes taking risks to reach to higher ranks in the hierarchy, which promotes innovation and healthy competition.
    • The only way one can make more money is by providing a better service than others.
• The market allows for a hierarchy of competence; the more skilled one gets at a task, the higher the market usually rewards them.
  • This is due to the market’s rule of supply and demand; the more scarce the supply is, the higher the price the demand is willing to pay.
  • If there’s an abundance in supply, the price goes down.
• Everyone has an opinion on how money should be spent.
• One only has a say in how they spend their own money. Nobody has a say in how someone else should spend their money.
  • Any act of doing so stems from envy, or is an act of intrusion.
• Incentives influence how people usually spend their money.
• There are 3 types of incentives: economic, social, and moral.