Wealth isn’t money. It’s the things people want that you can produce.
Money is just a way of moving wealth around. Wealth is cars, houses, food, software, ideas, tools, experiences — everything people value.
You don’t get wealthy by taking money from others. You get wealthy by creating something that makes the world richer — something that didn’t exist before or that exists in a better form because of you.
A farmer grows food; a developer writes code; an engineer builds a bridge. They all create new wealth. The economy is simply a network of people trading the wealth they’ve created.
The mistake most people make is thinking that wealth is zero-sum — that someone’s gain must be someone else’s loss. That’s true for money in the short term, but not for wealth. Wealth can be created out of knowledge, effort, and leverage.
So, to become wealthy, don’t think about getting money.
Interesting video: How Gold Destroyed Spain [They were confusing money with wealth. Money is just a medium of exchange. Wealth is the ability to produce things. UK/Netherlands used Spains money to build industrialization and stock market]
Think about creating something valuable. Money will follow, because it’s just how society keeps score of who’s contributed what.
Wealth is the measure of how much you’ve expanded the world’s possibilities.
Money Is Not Wealth (Paul Graham)
If you want to create wealth, it will help to understand what it is. Wealth is not the same thing as money. [3] Wealth is as old as human history. Far older, in fact; ants have wealth. Money is a comparatively recent invention.
Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn’t need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn’t matter how much money you had.
Wealth is what you want, not money. But if wealth is the important thing, why does everyone talk about making money? It is a kind of shorthand: money is a way of moving wealth, and in practice they are usually interchangeable. But they are not the same thing, and unless you plan to get rich by counterfeiting, talking about making money can make it harder to understand how to make money.
Money is a side effect of specialization. In a specialized society, most of the things you need, you can’t make for yourself. If you want a potato or a pencil or a place to live, you have to get it from someone else.
How do you get the person who grows the potatoes to give you some? By giving him something he wants in return. But you can’t get very far by trading things directly with the people who need them. If you make violins, and none of the local farmers wants one, how will you eat?
The solution societies find, as they get more specialized, is to make the trade into a two-step process. Instead of trading violins directly for potatoes, you trade violins for, say, silver, which you can then trade again for anything else you need. The intermediate stuff– the medium of exchange— can be anything that’s rare and portable. Historically metals have been the most common, but recently we’ve been using a medium of exchange, called the dollar, that doesn’t physically exist. It works as a medium of exchange, however, because its rarity is guaranteed by the U.S. Government.
The advantage of a medium of exchange is that it makes trade work. The disadvantage is that it tends to obscure what trade really means. People think that what a business does is make money. But money is just the intermediate stage– just a shorthand– for whatever people want. What most businesses really do is make wealth. They do something people want.
