Episode-1476- Understanding Money ~ I Mean Really Understanding It! — 72 Comments

  1. Since you posted this episode your android app will not play any episodes at all.

  2. Nothing changes until we start pricing goods and services in something else other than dollars. We are far from that. Bitcoin, silver, gold are all used as mediums of exchange but the goods and services traded for remain priced in dollars.

  3. Interesting that only Android users have posted so far. I can’t even get iTunes to download the podcast at all, just shows the icon saying there is a problem, but won’t say what that problem is. Will try again later.

    • I’m seeing the same problem on iTunes. Also, I get an error when trying to download via my Downcast app.

  4. @Kern, Conrad, GarnerArms, TruckerTim

    It is working fine for me in the Iphone Podcast app, fine on stitcher which reads the feed, the feed is fine,

    I can cause the feed to rebuild itself in Feedburner and will do so but that is all I control on my end.

    • Okay I used the resync nuclear option in Feedburner, try it now and let me know.

  5. I won’t be listening to this episode because of this statement:

    “Today I am going to really discuss money at a high level, perhaps in some ways at a beyond PhD level, since many PhD’s in economics frankly don’t truly seem to understand money themselves.

    At this higher level on some of today’s content things may sound a bit metaphysical, they are not, there is just a certain stigma to certain words at this point like energy and matter and intention.”

    Yeah doctors are not as intelligent or as educated. How arrogant

    • Yes people with PhDs in economics can often not explain money. That doesn’t make the not intelligent and it doesn’t make me arrogant to point it out.

      When people receive an “education” they are taught things the way the institution teaches them. Universities teach money the way they teach medical doctors health.

      MDs are smart but most most know almost NOTHING about health, the world health is barely used in Medical School (source Dr. Andrew Weil) MDs know medicine, they know anatomy, they know biochem but they don’t generally know health. If they do it is from self directed learning outside of medical school. Ask any HONEST doctor (MD) and he will tell you so.

      Ask an economist to define money he will likely say,

      1. A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account.
      2. The official currency, coins, and negotiable paper notes issued by a government.
      3. Assets and property considered in terms of monetary value; wealth.

      All are text book definition, all get you an A+ on an exam, none of them though actually answer the question of what is money.

      They answer

      How is money symbolized? How do we represent money? How do we quantify money? How do we account for money?

      And many other questions but they DO NOT answer the question of, what is money.

      That isn’t arrogant, it is fact. Now if you get the chip off your shoulder, listen to this episode you may very well come to learn the answer to the question of, what is money.

      It isn’t being educated that matters it is what you are educated about and how exactly that education is applied and the source of the information within the education, if you think that is arrogant, you may want to educate yourself as to the meaning of that word.

    • I have a PhD in Economics and I enjoy hearing Jack talk about money. Most of the models of money I learned are very abstract and only focus on one attribute of money at a time. None of them covered the psychological aspects.

    • All please remember that if you can see this page, all you have to do is hit play above.

    • Ya it works fine on my Desktop which is what im using now. It just my phone that isn’t co-operating. *sigh* gotta love technology.

      • I can go to the website using the andriod browser. I click on “download” below the title of the podcast but it only plays it and does not download it.

        • TruckerTim, Hold your finger down on “Download” (vs. tapping) and eventually you’ll get a pop-up. Choose “Save Link”. It will go to your downloads folder. Maple is a great app for playback. Cheers.

  6. I had the same issue. However, I Just Now downloaded the app again. It plays fine on my android, now.

  7. Thank you once again Jack for one more thing that I learn from you that makes me not want to go to college anymore….. I don’t know if I like it or now.

  8. ‘The vain man wants not only to stand out, but also to feel outstanding, and therefore rejects no means to deceive and outwit himself.

    Not the opinion of others, but his opinion of their opinion is what he cares about.’
    – Nietzsche


    • I actually was talking about this last night. A very recent epiphany that I had. The realization that its very often the case that we view our world and others via the projection of ourselves. It’s how we attempt to understand what another person is saying or doing with minimal explanation. The same would go with how we interpret their opinions about us.

      As stated we focus on the opinions that we can coerce in our minds to fit with what we think should be rather than what they “are”.

      • The entire purpose of Zen is to see things ‘as they are’ rather than ‘as we BELIEVE them to be’. Similarly to become a better (realistic) artist, one must learn to paint ‘what one sees’ rather than ‘what one BELIEVES one sees’.

        Our brain is lens of varying quality, distorting our view of reality.

        Zen seeks to lose the lens.

        @Mike – been reading a bit of Nietzsche lately.. if I had so sum up what I’ve read I’d say ‘be humble’.. which isn’t exactly how he’s normally summarized. 😉

        • No definitely not, but I completely understand how one comes to that conclusion reading his work. Major pieces of his work were set out to destroy the so called “facts” that were “discovered” by major philosophers of his day and before. As he continually concludes they were in fact at the pinnacle of arrogance and hubristicness.

          It helps Nietzsche is fun to read, especially for the “adhd” mind.

  9. Android app is fixed in version 4.0.9 which should be out in a couple hours. The feed had a small error in it (fixed now, thanks Jack), that triggered a bug in my app and put it in a confused state.

  10. I emailed Jason as soon as I saw it wasn’t just my app that was down. Thanks so much for the quick response! The app is outstanding and thank you so much for the work you do for the community.

  11. No problem listening on FB or your website. Good presentation. I, myself, am dependent on a small Social Security check, which has the possibility of going away in some off-chance way. Whether that happens or not, I am preparing to do without it by building skills that will/do have value, my own currency. I have lived with and without ‘money’, and can pretty much live without it. Being frugal, repurposing, and foraging have lots of advantages, which satisfy all/most my needs. Adapting to changes adds and removes value, causing one to be aware of currency when and where you find it. I’m pretty sure I’m not alone in this. You know the military saying, “I’ve done so much with so little for so long that I can do anything with nothing.” Doing something, even if it’s wrong is better than just talking about it. I’m laughing more and more all the time when I hear people talk about how they’ll do something. Let me say there are a lot of lies, and misconceptions out there, and a lot of people are gonna be surprised. Thanks for clearing up the ‘money’ mystery.

    • You SSI check will NEVER and I mean NEVER EVER go away. But what it buys might become almost nothing.

      “Yes we can guarantee the social security money will be there, no we can’t guarantee the value of the money at the time a beneficiary receives it.”

      Ben Bernanke in response to a grilling by Ron Paul in the House Finance Committee.

  12. So this was an episode that I have listened to twice already. Many subjects you spoke about are things I have already heard you say so they weren’t difficult to grasp. There is one thing I’m having trouble wrapping my head around.

    “Money is neither created nor destroyed.”

    I’m still having trouble with that one. Do I need to completely separate “money” from “currency” to fully understand the implications of that statement?

    • YES!

      And this is why I say most economists don’t understand money, they either believe currency to be money or a commodity (like gold) to be money.

      But all of those things are NOTHING but symbols that represent energy. Be it stored energy or expended human labor, etc. Money is simply energy, currency is a psychological contract in an economy to represent said energy is a certain way.

      There are other laws of energy that apply to money.

      One is that energy is for all intents and purposes infinite. Scientists argue this point at a very high level but all would agree at the scale that is humanity it is infinite to us. It is only our lack of ability to harness it that is limited.

      There is more solar energy falling on the earth alone for a thousand times our needs. The key is harnessing it. The oceans movements alone could power the entire planet a thousand times over with no real loss to anything if we knew how. Will we do either some day, I don’t know.

      But individuals can and do harness said energy for all their needs.

      You can with proper planning do the same with “money” and there is NEVER a shortage of money, EVER the only limits are our limited ability to harness it.

      You harness solar energy with what? PV panels.

      You harness wind energy with what? A wind generator.

      Tidal energy is harvested with what? A tidal generator.

      So what do you harvest monetary energy with?

    • I have one more question. Why do you use the phrase ” journal entry” when speaking about the Fed transferring money to a bank or whomever? IS there a background to this term?

      • Because that is what it is, a accounting procedure.

        You could call it either a journal entry or a ledger entry.

        Let’s examine it this way. Say you want to buy something from me. I extend you direct credit. In other words you don’t use a credit card, you just owe me money.

        So on my books I put in my Accounts Receivable Ledger Mark – 1,000 USD and with that you owe me a grand. Putting it on the books keeps track of it but it also makes it officially part of JackCo Inc.’s books.

        If Insidious Co wants to buy JackCo then my AR ledger attributes value to my business. In a business valuation you know that some customers won’t pay but an average of say 75% of your AR will come in. So if my AR (accounts receivable) is say 100K in a business valuation where I sell my company they might value it at 75K based on my past books, averages for my business sector, etc.

        If I sell my assets to Insidious Co you now owe Insidious the grand not me, he buys your debt from me.

        That is basic accounting and in the real world for that 1K of debt Mark I have to give you something, money as a loan, product or service on credit, etc.

        Now the bank does the same thing, Mark wants to buy a house. Now you want 100K. The bank does research to make sure you are a good risk and has an underwriter sign off that you are good to go.

        Now on the day you buy the house they enter into the AR Mark – 100,000 USD and with that you owe them that money. But they don’t actually take money out of their bank to give the seller 100K, nope they just use that AR Journal entry to CREATE THAT NEW 100,000 dollar debt.

        They use you to create the money. It creates 100K on the front end and say 93K on the back end (your interest payments).

        Then they sell your debt to another company and transfer the journal entry to them, pocket the cash and do it again.

        Where does the “money” come from? From YOU, your promise to pay, represented in an accounting journal creates it.

        It is dramatically simple, so simple it repels the mind!

        • I got it. I think my confusion came from neither owning/managing a business nor taking accounting in school. I know what “accounts receivable” is but didn’t put JE and AR together. Now it makes more sense. Thanks for clearing that up. I should have asked about this a long time ago.

          See???? You aren’t such a jerk(going back to Ep. 1476). You can be a nice guy.

  13. No that is just a symbol.

    I gave the answer in the episode.

    The creation of value. That is a monetary energy catchment system.

    • Damn it. You’re right. You spoke about it the last section of the episode. Thing is, I’m currently trying to do this. I’m building a soap business. The thing I struggle with is the value. In order to make soap worth the energy I’m putting in, I need to charge more than I think it’s worth. But maybe the value isn’t the same for me as it is for someone else. Any thoughts on that?

  14. I was still unable to download this episode as of about an hour ago, or even stream it from my podcast app. But I just unsubscribed and re-subscribed to the podcast, and all is well now. Just FYI for anyone else still having troubles, might be worth a shot.

  15. I use Podcast Republic on Android and I still haven’t been able to download the episode even after unsubscribing and re-subscribing.

  16. So, Jack, are you saying that if the economy tanks, or receiving a chip which may mean no banking/buying/selling, or an EMP event should happen that ABSOLUTELY no one will lose SSI? There is NO event in which that can happen? Am I silly for preparing for the possibility? And can we trust Benanke words?

    • @Aayla –
      If you’re re-asking, I don’t think you understood Jack’s answer. =)

      Is it possible you could stop receiving a check? Yes.

      Is it possible you could receive a check, with the same dollar denomination as now, that won’t allow you to buy a single apple? Yes.

      Bernanke was basically saying ‘we can crank out as much currency as is required to ensure they get a check with the same number on it as they receive now.’ BUT.. we can’t do anything about that currency having any VALUE.

      ie. You have a million dollars (currency) but in the marketplace that only buys a single roll of toilet paper (value).

    • Okay if a meteor blows up the earth or Marvin the Martian pulls that off with his “Illudium Q-36 Explosive Space Modulator” yea SSI might be a casualty too.

      But if that happens we will all be dead so don’t worry about it.

      But for all the reasons people think SSI will fail it won’t, not in a way that will effect those on it or close to being on it anyway. SSI is actually very self adjusting, they just screw you by changing the inflation index that determines raises in it when ever they want to pay less and let real inflation do the rest.

      For the rest see Insidious’ answer.

  17. Jack, Thank you for breaking this down. Money as stored energy is the most fundamental building block of the system.

    When people talk about wealth redistribution, I try to help them realize we already have a process for it…bring some value to the market place, and I’ll give you some of my energy in the form of money.

  18. Something that stuck me that I wonder if many libertarians have thought about, shouldn’t they like what the Fed is? It isn’t part of the government, it is a private business. Isn’t that what libertarians want? Granted, it has government protections, but shouldn’t the libertarians being fighting merely to have the protections take away, and not necessarily the complete destruction of the Fed? That would allow for a more market based win-lose situation for whose currency people use in their day to day life.

    Also, if you think of money as energy, then shouldn’t people’s money naturally become less and less in time. Power (which most people call energy which is actually incorrect) is actually the integration under the curve of voltage over time, it isn’t simply voltage*current. So the work you perform today doesn’t have any potential going forward, it is behind you. The curve for that energy generated yesterday has less and less marching forward each day because the time variable is getting greater and greater. If you want to think of it as a battery, a battery holds Power, but not indefinitely, they all discharge at some rate over time. So if your money is suppose to hold to this same nature concept, your money should always naturally dissipate in value. We can it generally by its economic names inflation, deflation, etc., but the second of law of entropy is also at play, that all energy devolves into its simplest forms that are generally unusable to higher order systems/creatures such as ourselves.

    All in all, this was a good show; these are things that stuck me as you were going thru the concepts.

    I think much of topic of money simply gets down to one concept: Do we trust each other? Is this truly a world of abundance or finite resources? If we do trust each other, then any system of money works for a society.

    • Absolutely not! Libertarians are opposed to state control. The Fed is a private company with the power of the state backing is monopoly. The Fed is the antithesis of a free market.

  19. Thanks for fixing his insulting link. I guess you are more concerned with insulting your audience than helping them understand your show. I guess I’m just not on you guys level to understand such a complex topic. Next time I’ll just shut up a sit in the back with the common folk.

    • Also how exactly would you respond to your original question. You don’t get the point of an episode where I spoke on the main topic for about 90 minutes? What exactly do you expect in response to that? About all I can say is listen again, may be you will get the point.

      I don’t know, I explained how money works, how it has enslaved society, how it is created, etc. and you don’t get the point?

      Do I think you are trolling? Based on your past comments no. Can I see how Insidious felt your were, oh yea you bet.

    • @Homer –
      If you weren’t trolling I apologize.

      Point of the Episode:
      Money is a, if not the, most powerful tool available within society.

      Therefore understanding what it is, and how it works, is important.

      Purpose of Episode:
      Explaining what it is, how it works, and how it is currently being used by the ‘powerful’.

  20. I don’t know what trolling is. I simply stated my opinion on the show. I must say that after this juvenile exchange I have lost a lot of respect for you Jack. Whether or not I completely understood the point of the show is irrelevant at this point.

  21. Great episode, Jack. Energy! I had thought about money as effort before, but this further refines that school of thought. Enlightening, thank you.

    Also, all these comments and nobody mentioned the best part of the episode? Jack’s discussion on “koopins”? 😀 I nearly went off the road! Just joshing ya, Jack.

  22. Anyone follow Bill Still’s view on money? While I don’t agree with it completely I find it an interesting take on who should control the money supply.

  23. Jack you didn’t hit on this in the show but put it in the show notes:

    You harness solar energy with what? PV panels.

    You harness wind energy with what? A wind generator.

    Tidal energy is harvested with what? A tidal generator.

    So what do you harvest monetary energy with?

    before the show no one would have understood the answer even if you gave it to them. Now most of us understand and if you understand this you can use it. Thanks Jack was a great episode and you’re a great teacher.

  24. I definitively understood each piece; how money works, how it has enslaved society and how it is created. I understand the “You harness solar energy with what? PV panels. You harness wind energy with what? A wind generator.
    Tidal energy is harvested with what? A tidal generator. So what do you harvest monetary energy with?”. <—- completely connecting the dots there.

    Where i'm lost is how this connects to me and the bigger implications to those individual pieces as a whole. I hear in your voice that understanding this is a total game changer but I'm not seeing what that is. Help! I don't know what I'm missing but i know i'm missing something!

    • Money harvesting is typically an exchange of value.
      It can be a job, but that’s possibly the least efficient energy exchange…at least in the output on your end.

      People talk a lot about building a business as one of the best methods of building wealth because if you get it right, you can generate a better return per hour than your job. …but as they say…When you work for yourself you can work any 80 hours per week you want. I think most people test out business ideas as a side project while they have a job. I have friends who waste dozens of hours per week gaming and/or playing fantasy sports…I think building a business is one of the best hobbies you can have.

      The cool kids pile up enough wealth to invest. Good investing can be the most efficient means of capturing the power of money….but there’s plenty of challenges there too. There are thousands of sources of info on this, but one possible source of info is John Pugliano @