What is wealth, in a nutshell?

A tweet by Charlie Bilello, an American financial planner, restating an original message by James Clear, author of Atomic Habits. Charlie knows what wealth really is but like so many of us, seems to have forgotten.

The first one is mostly wrong. And understanding what wealth is will change how you see the world and how wealthy you become. This won’t take long, you already know this.

Money is just a social construct that’s more convenient than swapping a leg of lamb for a pint of beer.

The tweet above reinforces the popular misconception that money is itself wealth when wealth is simply “the things people need and want”, like a leg of lamb or a pint of beer.

People think the supply of money is mostly fixed and so having money means you must have deprived someone else of it.

That’s completely false: wealth is created by people like you. The things we all need and want are created in people’s minds and then satisfied by someone willing and capable.

Beer is brewed, lambs are born, raised and then someone has to be willing to butcher it and sell its meat. That brings us nicely on to Adam Smith, a social commentator and economist who pointed out that,

“It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”

Capitalism is the freedom to create the things people need and want, and continue to own that means of production as a reward for all their bother and risk.

It also grants everyone the freedom to nurture desire in other people’s minds, and then satisfy that desire. The Italian’s got good at this; Gucci, Ferrari.

Money is simply an in-between state. Modern money declines in value over time so that instead of hoarding it, you treat yourself to two legs of lamb, or an asset like a share of someone else’s brewery business. You share in the wealth generated and they get some cash to buy yeast or something.

So now you know. Wealth is value and value is in the eye of the beholder and the belly of the hungry. Money has no value without all things to spend it on (plus tax). Taxes pay for schools, hospitals and warships.

When you dream of money, you’re really dreaming about all the possibilities. But I sad mostly wrong because some condemned souls desire money for money’s sake.