The Economy: Why Money Doesn’t Matter

Alasdair Forsythe
6 min readNov 1, 2020

Money: it’s not a thing.

Money is a symbol of value, it’s a token given in exchange for something that represents the value of the thing you gave. You can then exchange this token for something of equal value that you want. It’s a record of trades, for example: I can sell 100 apples for $0.50 each, and then later buy a skateboard for $50. When I originally gave away the apples I’m down $50 in value, I lost the apples but gained nothing. Money records this debt that I’m owed by society. Later I exchange this record of the value I’m owed by society, for a skateboard.

The job of those that control the supply money in society, whether they know it or not, is to ensure there is roughly the same amount of money as is the value of products and services being exchanged.

Running out of money is only a logistical problem. It’s not a real problem. It is, as Alan Watts once put it, like running out of inches.

For example, to build a house you need builders, e.g. people, and resources, e.g. wood. Money is given to those builders and resource-providers as a token of the value of their work, a record of the value they added to society, which they can later cash-in with someone else for something else of equal value. Money is otherwise nothing to do with it, and not having enough money does not mean you cannot build the house.

Running out of money is like running out of inches. Things stop. Houses stop being built without inches, and without money. But neither inches nor money have anything to do with whether the house can be built. If the builders and wood-cutters want to work, and someone wants a house built, then the house can be built. What does money have to do with this? Nothing.

Throwing money at something is analogous to increasing its priority within society. For example, if you give more money to a school it can, in theory, attract better teachers. But these teachers don’t come from nowhere, they leave some other part of society. The injection of more money prioritizes that job or problem above another. It’s a way to decide who does what, and what is more important. It’s a vote.

Money, within a society, is nothing but a system of accounting for how much value each person has added to society. Some areas are over-valued and some are under-valued, but that’s aside from the point.

The same outcome, that is everyone doing their job and working together for the betterment of society, could be achieved in other ways: you could have a commune, or a military dictatorship, or a slave-master economy, but money is the fairest way to ensure no one is taken advantage of. The other ways are all uneven; someone gives more than they get. To have a fair method you need to record how much value people give, so the same amount can be returned to them, and that is what money does. It’s a very efficient way of getting everyone to do their job, and of having society democratically decide what is important, and of making sure its done so in a fair manner.

Basically, someone gives you ‘points’ (dollars) when you do something nice for them, and you can get other people to do nice things for you too by offering them your points. If you want to encourage people to help you out more, give them more points. If you want something to happen, offer points for it.

That’s all money is: a system of accounting how much value each person has added to society. It is one way of ensuring society is fair, and that everyone gets back an equal value to what they give.

If money is only an accounting system, the more products and services… the more money.

The Money Supply

The amount of money in the society always needs to match the total value of products and services being exchanged. That means creating products and services creates money. The more people buy, the more money is needed. The purpose of controlling the money supply, and the reason why the stock market bounces up and down on an upward trajectory, is because its impossible for anyone to know what that figure is at any point in time.

While no one can tell exactly whether the amount of money supply matches products and services available, you know when there’s too much money, because it results in inflation. And you know when there’s not enough money, because you get the situation where someone wants a house, someone else wants to build a house, and nothing happens.

That latter situation, which is a depression, should never happen. It’s a mistake in the money supply. It’s like running out of inches.

The ebb and flow of the economy is caused by the fact that it’s impossible to know when the money supply matches available products and services. But since we know when it’s too high or too low, it bounces up and down off these two extremes. This causes the pattern seen on the stock market:

The amount of money in the society, and therefore any country’s GDP, can increase for as long as new products and services are created. Because new technologies create new types of products and services, this means it can increase forever. Really forever? Yes. For example, the invention of a smartphone creates an entire eco-system of millions of apps. One app can have an entire eco-system of different colored hats that can be bought for the player’s avatar. We will never run out of possible products and services. We can always just make more digital hats.

What About Deficit?

The US has a deficit of around twenty-six trillion dollars, $26,000,000,000,000. That’s a lot of zeros! What does that mean though?

The US owes money mostly to China, Japan, the Federal Reserve, and itself. Most people think this is a problem… it’s not.

There’s a saying:

If I owe you $10, I have a problem. If I owe you $10 million dollars, you have a problem.

If the United States owes other countries money, this is good for the United States. It means that the United States currently has more than its fair share of value internationally. It means the US is winning.

Also, a country is not a person. Countries have armies. If you don’t pay your debts the bank can repossess your house. If the United States doesn’t pay its debts, nothing happens. It doesn’t matter then how big the deficit gets because there are no consequences — only advantages.

In fact, the deficit can go on forever, and the bigger it gets, the better for the US.

What Does It Mean?

It means that problems are not solved with money, they’re solved by getting the right people to work on them. Money is one way to do that because it attracts more people, but it’s not the only way to do so.

It means that when there is a depression, or when there are not enough jobs, this is due to negligence of the government.

It means that extreme inflation is due to negligence of the government.

It means that national debt is not a problem for strong countries.

It means that the stock market can really go up forever, and will inevitably bounce around a little to check it’s in the right place.

It means as extended reality becomes part of our lives, the potential number of products and services will increase exponentially, and therefore so will the amount of money.

It means that jobs matter. It means that entrepreneurship matters. It means that money doesn’t matter. Money may be the token used to record value but is not value itself; the value is and has always been the product, service or skilled labor. A healthy economy rewards value, but remembers that the swimming is more important than the swimming certificate. Likewise redistributing swimming certificates does not make bad swimmers better, does not help them to become better, nor does it improve anything.