What is money?

In just over a month, Sounds True, an audio production company, will release  a 2 CD set of me speaking the philosophy and practical steps of Your Money or Your Life. I hope you’ll all buy it as it reflects my 20 years of teaching the program. They asked me to respond to a few questions to post on their website – guideposts for people perplexed about their relationship with money. Here’s my answer to “What is money?”:

Money is endlessly fascinating because it reveals the paradox and complexity of our brief, exquisite human existence. It is a mirror, a door, a shelter, an albatross. It is self expression and self negation. Actually, “it” isn’t anything – our relationship with it is where the action is. Here are a few considerations about what money is and does.

Money is a human invention. It has no intrinsic value. It only has value at the moment of exchange. If someone won’t take your dollars in exchange for a product or service, your money is worthless. Our currency is not backed by gold, silver or any tangible asset. It’s called “fiat currency” because we have faith that it has value. The US dollar says “In God we Trust” but in fact, it’s more like “In a general perception that this bill is worth something we trust.”

The right to create money doesn’t reside in the government. Most money is created as loans from banks. With less than 10% of the value of a loan in the vault, the bank is authorized to lend money. By the stroke of a computer key, $10,000 that didn’t exist before can appear in your bank account as a loan. Then you have to pay that money back, with interest, through selling your time/productivity. This way of creating money necessitates an expanding economy. If it didn’t expand, people would not be able to pay back their loans. We’ve seen this happen in debtor nations – they can’t grow their economy enough to repay their loans and sink further into debt. Excessive debt becomes the driver of social and environmental destruction.

The money in your life has value to you because you use a large allotment of your time on earth working to acquire it. Money represents the life energy you invest in getting it. You buy it with your time. $10, then would equal 20 or 30 or 60 precious irretrievable minutes of your life. Knowing that money equals your life energy instantly makes you value your time and money more, and spend it wisely. You might be careless with money – especially with credit cards – but you are less inclined to be careless with your life. Once you know money is life energy, you behave differently. You still may have mental distortions, you still may have emotional attachments, but you now know concretely “the value of a dollar” and this alone points you towards a clear, conscious relationship with money and the things money can buy.