Is Money Bad?
Money is a guarantee of action. Holding it is a promise that others will act. Saving it allows us to save up the potential actions of others, and since actions create the future, with money, we can impact what the future will look like.
Money is not the only guarantee of action, but the most broadly used and generally applicable one in the world today. We believe in money and trust that it will keep its function in the future. This trust exists because of the institutions that create and maintain a trustworthy system in which money can exist and function.
To get money, we can create it and/or exchange something for it. Today, commercial banks are the creators of almost all the money we use. It might sound counterintuitive, but commercial banks create money through lending. They also decide who they lend it to, and by doing so, decide who gets it and who doesn’t. The people who get it can then exchange it for the actions of other people.
People with lots of money, have a very large impact on what the world will look like tomorrow. But those that create money and hand it out, have an even larger one. To understand whether money is bad or not, we must focus on the latter.
If the bank creates money for people who only consume, there will be more money for the same amount of things to consume, and prices will increase. If the bank creates money for people who buy and sell existing products and services, such as houses, for example, there will be an asset bubble, meaning the prices will increase before eventually coming crashing down. But if the bank creates money for people who use that money to produce new goods and services for other people, everyone will be better off.
Those who create money, or have lots of money, might have a vision of the future that we completely despise. That’s fine. We don’t have to agree. But it doesn’t automatically make them bad people, and it doesn’t make money a bad thing. Money has the potential, if created and distributed correctly, to make everyone better off. Money becomes bad when it is created for the wrong reasons, meaning, for people who don’t create goods and services that are useful to other people.