Money as a Measure of Value
Hopefully, none of us will ever see our money become worthless, although in a sense that is what happens through inflation. Not too many years ago, as a society, we thought a loaf of bread was worth about 50 cents. Today, we generally agree to pay somewhere between two and four dollars, depending on things like freshness, packaging and special ingredients.
And that simple example holds the key to your getting rich! In my family, we pay more for a loaf of bread that contains whole wheat, is freshly baked, and that we have the “privilege” of slicing ourselves. Why would anyone pay more for unsliced bread? Because of our concept of “value”. Keep that in mind!
It’s only been in about the past hundred years that society has moved away from considering only gold and silver as “real” money. Credit cards, as we know them, were invented in the early 50’s, shortly after WW II, and many subscribers to my weekly newsletter remember when credit cards were rare. Today everyone accepts credit cards and electronic transfers as real, and the numbers printed on monthly statements from our banks and stock brokers can make us happy or very sad!
What does all this history and philosophy have to do with making you rich? I admit this may seem like a long detour, but I assure you, it is the key to getting rich! Remember, in the last chapter, I wrote that money is an agreement about value. If you want more money, you must create something that other people value! Throughout history, the things we value have changed. At one time, we valued animals, like cows or pigs. For centuries, horses were particularly valued for their mobility and value as a source of military power. Even before that, with the rise of agriculture, land was valued because we could use it to grow food, and the crops were extremely valuable. For many people today, land remains a primary source of value and they will pay a premium for a piece of ground on which to have a yard, perhaps a small garden and a sense of privacy. For others, however, land is of little value, and they live in apartments or condominiums.
By the 19th century, industrial capacity emerged as the primary source of value, and the richest people in the world owned railroads, oil refineries, and steel mills. The ability to produce “things” was the most valuable ability on earth, followed closely by the ability to sell or “retail” those things. Families like the Rockefellers made fortunes in oil, while Henry Ford created the modern assembly line and the Macy’s, J.C. Penney’s and Sears & Roebucks created value (and wealth) by making products available to the average consumer.
In the past 25 year, however, attention has shifted again, and we now value information, and even more, the ability to use information to solve problems. That is the key to wealth!