Making money is an ancient art. Even before money was invented back in the 1500’s when banking was invented, people traded in value. So money essentially is a numerical representation of value. Before banking was invented, money was owned and controlled by the monarch. The royal mint produced coin made of gold which was weighed and equal in value to the gold it was made of. However, over hundreds of years, the people realized that this gold can be filed and shaved off. Shaving a little from each gold coin before using it in a transaction allowed them to melt down the shavings and use it illegally. The monarchies of all countries failed to find a solution to this dilemma and this went on for hundreds of years.
Gold was the first precious metal assigned by authority to represent value and it is this word “VALUE” I want you to keep your eye on. Just as today, we cannot eat a dollar bill or sleep under it to give us shelter, the royal gold coin could not be used to be eaten. So the gold coin and today’s dollar bill do not have an intrinsic value on their own. You cannot ride it, sleep in it, eat it, or even take it with you. All money does is count value in a decimal numerical nature. So, lets dwell on this minor revelation.
Let’s say you want a million dollars. You want a million dollars to buy a nice house, get a cool car and go on holiday. You can do all those things with a million in cold hard cash. But wait a minute…where does the value reside? If money, as we have just established is the numerical representation of value, where is the value? This is perplexing. The money, the million bucks sitting there on your kitchen table, in hundred dollar bills, represents all those things which YOU value! You can look at that money and it will not be put into gear and be driven. It does not have a door so you can enter it and sleep in it.
The only reason that money has value is because there are billions of other people that agree with your perception that this million bucks has value. If they didn’t agree, you could not spend it for the actual value. This is getting interesting. Because what we have actually established is that value is elsewhere and the only reason money has representational value is because everybody else agrees with you. People all over the world toil daily to get some money. They work in day jobs and take risks of all kinds to get some representational currency of value so they can buy food, shelter and other things.
Wealthy people know this. While the majority toil for the representation of value, wealthy people seek out real value. They get it for next to nothing and sell it off piece by piece to people with representational value (paper money) Just like paper money, which is representational value, real value also depends on the wholesale agreement on value. Value resides in human need. Emotion and logical conclusion is where the actual value resides. Your own estimation of what is valuable and that of everyone else is what constitutes intrinsic value, value that you would part with money to get. So actual value that money represents resides with the individual. If there is enough individuals that also agree with the estimation they gather in number to form a market.
Need comes from one of the human five senses. Visual appreciation of value, Auditory appreciation of value, Kinetic (touch) appreciation of value, olfactory (smell) appreciation of value and taste. But there is a sixth, engagement. The sixth (engagement) can be a combination or just one of the five senses. It is this element of engagement which forms a conclusion of value and therefore has monetary worth. Engagement is where the mind perceives the intrinsic value to be worth more than the representational value you have in your pocket and therefore you will be willing to part with it in exchange for the real value.
What does all this mean to you and how does it help you make wealth. That should be obvious. Wealth is created by securing real value and selling it off to others in exchange for the storage vehicle of representational value or money. When you store your wealth it grows through interest and capital appreciation.
The point is this, intrinsic value is based on the human perception of others. This being the case you can create value from thin air and make it worth money.