Perhaps nothing else takes up so much of human thought as money, the endless worry, the hankering, the planning, the portfolios, the strategy… Apply that much effort and planning to acquiring knowledge or skill, or even love, and the results would be unbelievable.
Forget the tomes full of vague economic theory; essentially, money is a measure of desirableness. Something more desirable is more expensive, but this is purely subjective - I would gladly pay 1000s of dollars for an antique motorbike, but I don't see myself buying an iPad for a few 100.
Business models and advertising work in two ways
- Detect a latent desire in the customer and exploit it subtly - "You must look fair and beautiful!" and sell pureed edible matter with Freudian ads - as if the skin would eat that food stuff and be nourished.
- Create a desire within people where none existed - Nobody but nobody needs a 2 gigahertz processor on a mobile phone - seriously!
This can work well only if there is consensus, so over time, certain things have come to be agreed upon as being "Most Wanted" - Throughout history there have been bouts of weirdness when some commonplace thing was driven into an upward price spiral by frenetic demand - like the Tulip craze in Holland a few centuries ago, and the steep price climb of second hand classic Royal Enfield's, RD 350s and classic Jawa's here now!
Most of the world's currency today is not backed by anything of "real" value. There is no gold in Fort Knox, nor will the "Governor" on the rupee note be able to fulfil his whole "I promise to pay the bearer the sum of hundred rupees" declaration if you held him up to it. Blame it on the reservoir dogs - I mean the fractional reserve dogs….
Thus, it's essentially bits of storage on some huge high-MTBF database server, that decide how wealthy you are - A single bit flipping due to a cosmic ray may throw you wildly across the wealth spectrum - but maybe not, there's all sorts of mechanisms (mostly redundancy) to prevent such glitches.
Some people are willing to wait for the things they desire, and will sacrifice time, in order to have the illusion that money is under control, while others will see money as a flowing phenomenon ebbing and waning, but flowing nonetheless. Some know the skewed nature of capitalism which lets you ride the wave of whatever is currently the fad. It would be quite unwise in this age to make any predictions about the financial state of the world 5 years in the future, let alone 25. Which is why the whole "save it for a rainy day" concept is not quite graspable for some people.
There is one investment that is the most fruitful, fully within your control, 100% guaranteed returns. That is your own precious self.
Whatever it takes to improve your physical, mental or digital self is way more useful an investment than any sort of material or property. An investment grows wealth from a seed - Any idiot can make 2 million if s/he already possesses 1 million. The challenge is to create wealth out of practically nothing, and no, building a marketable product with investment, while quite an impressive skill, is nowhere close to being able to create something valuable out of nothing at all.
In the (near) future…
Imagine a world where energy becomes free or extremely cheap - I'm taking about 1000 kilowatt-hours per dollar or less. In that case manufacturing anything is possible. There's enough energy to melt down and recast any bit of metal, enough energy to suck the CO2 right out of the air, enough energy to distill all the water in a river, enough juice to transport icebergs en masse from the Arctic to the Sahara. Enough to grow zillions of tonnes of food in hydroponic farms indoors. Enough to melt yourself a home out of a block of granite, with furniture to boot.
Once that happens, survival commodities will become free or trivially cheap, and economics as we know it will go for a full toss. In such a world, generating demand for anything will be extremely hard. Wealth as we know it will no longer work. Everyone is well fed and almost everyone will have no use for a number of things that solve problems that exist only today. Money is popular because it is mostly scarce, and it is scarce because it gets used up mostly for survival. Re-balance that equation, and suddenly we're not in Kansas anymore.
It will most certainly happen in the next half century or so.
And then the whole concept of virtual wealth - There are a number of online communities/games/virtual worlds where there exists some sort of karma or brownie points or whatever, and people are already directly or indirectly trading them for real money. Eventually memories, dreams, experiences will be up for download/sale, and most probably virtual goods will be traded in virtual money - Entire parallel economies will get created, and perhaps when physical necessities are not so hard to get, virtual commodities will become more valuable - If you're well fed, only then you look for mental stimulation.
In a way, money is an illusion, a vague measure of desirability of things tangible and intangible, which the marketing and advertising worlds try to force into homogeneity. A reduction in desire means a reduction in exchange of money, which is why materialism and "entrepreneurship" are promoted. You MUST buy a lot of stuff, or you MUST sell it, or you MUST market it, otherwise you are not in the club, you are an outside (wo)man in the Skonk Works. And stuff can't last too long, it must fall apart or be considered obsolete, otherwise no one is interested in selling it. Steel is passé, Plastic's in - whether in motorbikes or utensils.
Most things are only replaceable, not repairable.
I have a simple way of measuring wealth - I look at how much I make a day, and when I need to pay for something, I calculate how many days of work went into that. That gives a very clear picture of what something is worth and how much I should worry about prices.
For e.g. I spend about 3% of my income on fuel, that's less than one day per month's work (about 8 hours). Even if the price of fuel doubles, It will simply add in theory 24 minutes of extra work per weekday to make up for it. Thus fuel prices are not even worth bothering about in my case. The same applies to things like taxi fares, electricity, internet and food bills. None of them are significant enough expenditures to worry about if the prices do go up, and I gain nothing by trying to economize on them.
Perception is everything, and stories abound about what the value of one minute of a person's time is. Some will say "It's harder to program in Java than to pull a rickshaw, therefore the software guy deserves more." - On the other hand, almost anyone with less than half a brain can program in Java, but it takes real guts (and calf muscles) to pull a loaded rickshaw.
There were times on the earth where art was highly valued in some cultures, while in other times and places, including India now, the artist are more seen as an artisan, a lowly life-form who performs for the entertainment of king and court.
The same goes for craftsmen… in the US, a plumber can make more per hour than a manager, whereas here, a plumber is a mistri, a skilled laborer and his job is supposed to be so demeaning, that someone with knowledge of such a subject itself can cause eyebrows to raise, if it is brought up in a social gathering. One is reminded of Isaac Asimov's tale Strikebreaker in which a certain Mr. Ragusnik is held with similar disdain.
There is elitism about certain ways of making wealth, that is a cultural meme of the current age - Almost everyone who makes a decent amount of money today, does so by shifting dead trees (paper), and I will go so far as to say that 98% of these tasks are automatable.
It's a crying shame that a dancer, or a teacher, both individuals (my friends) who bring color and light into this world with great effort and enthusiasm, do not receive their deserved due - not only in monetary terms, but even as respect and encouragement.