The fictional nature of money

How real is money?

Old money signFrom one perspective, it’s the most real thing in the world. Without it, you don’t eat, you don’t have a place to live, no clothes to wear, etc. unless you’re living out in the wilderness, foraging off the land. Money can be a tremendous amplifier of personal power. With an inexhaustible supply of money, you could solve world hunger, cure disease, and end conflict.

On the other hand, money is entirely fictional. It’s a construct, an artificial intermediary between things we value, because we may not value them equally or at the same time. I may sell email marketing and you may sell search engine optimization. If I don’t need SEO, no matter how valuable your skills are, I won’t trade with you no matter how much you need email marketing. With money, if someone else needs SEO, you can take their money and then give me that money for email marketing.

How fictional is money? The recent stock market mini-crash (due to a trading software error) caused several indexes to lurch as much as 10% below their value in mere seconds. At one point, the Dow Jones Industrial Average was down 998 points. This erased as much as $1.25 trillion dollars of theoretical wealth in mere minutes. Think about that for a second. Think about how much money that would be if you had it in your bank account.

  • You could send 5 million students to college for 4 years.
  • You could spend a million dollars a day and not run out of money for 3,424 years.
  • You could own 1,667 super-giant luxury houses.
  • You could pay cash for the entire Iraq/Afghanistan war and still have a couple hundred billion left over in change.

Think about the fact that $1.25 trillion was erased, vaporized, in just minutes. Imagine every student in college right now quitting all at once, or an entire city block vanishing in just minutes. That’s staggering, when you think about it. It’s hard to wrap your brain around.

Now think about the fact that the NASDAQ ordered a nullification of trades between 2:40 PM and 3:00 PM (when the mini-crash happened) for trades exceeding 60% of market value in either direction. Poof! Suddenly a big chunk of that imaginary money that was lost is back again.

You couldn’t build 1,600+ houses in minutes. You couldn’t enroll 5 million students in minutes. You couldn’t wage a 9 year war in minutes. But because of money’s fictional nature, you can make trillions of dollars appear with just a few clicks of a mouse.

What does this all mean for you? Think about your attitudes towards money, towards what you’re chasing. It’s a completely fictional construct that in our society is anchored to faith alone, making it the one true faith-based initiative our government has successfully created. Money is worth only what society believes it to be worth, because we can create or destroy vast quantities of it in minutes. It has no intrinsic value.

More important, if it’s entirely fictional, if it’s anchored only in belief of value, then instead of chasing money, think about how to create the perception of value. Think about how to inspire in someone else the desire to give you anything you want in exchange for that perceived value. What do people value about you, about your products or services? How can you provide more of that value perception? How can you boost the perception of the value that’s already there?

What do you value? I know that as a businessman, I tend to value three big things – things that will save me time, things that will save me money, and things that will make me money. If I perceive that your product or service can do any of those things well, I perceive that it has value and will buy from you.

Change your focus from trying to take other people’s money to creating the perception of value and see if other people start handing you a lot more money.


Did you enjoy this blog post? If so, please subscribe right now!

Get this and other great articles from the source at www.ChristopherSPenn.com! Want to take your conference or event to the next level? Book me to speak and get the same quality information on stage as you do on this blog.

  • http://www.CKRinteractive.com/ Ralph Leon

    This was a very insightful post and the idea of value perception was dead on. It is a great business approach and mind set that can be a win win situation. Thanks for the advice, enjoyed the read Chris.

  • http://www.thursdaybram.com Thursday Bram

    I've always found it a little hilarious that we all go along with this myth that a dollar bill is actually worth something, considering that it's just a fancy piece of paper. I think that, for many of us, the myth can be an issue: grasping the underlying value of whatever you're trading paper for is hard.

    When I'm buying or selling something, I try to associate a concrete value with the transaction. Am I willing to swap all the food in my fridge for whatever I want to buy? What about my car?

  • http://www.CKRinteractive.com/ Kimberly Otsuka

    This was a very insightful post and the idea of value perception was dead on. It is a great business approach and mind set that can be a win win situation. Thanks for the advice, enjoyed the read Chris.

  • http://www.thursdaybram.com Thursday Bram

    I've always found it a little hilarious that we all go along with this myth that a dollar bill is actually worth something, considering that it's just a fancy piece of paper. I think that, for many of us, the myth can be an issue: grasping the underlying value of whatever you're trading paper for is hard.

    When I'm buying or selling something, I try to associate a concrete value with the transaction. Am I willing to swap all the food in my fridge for whatever I want to buy? What about my car?

  • http://chrisbrogan.com Chris Brogan

    I haven't been TO your blog in a while. Quite interesting. I like the redesign.

    Regarding this concept, I've been reading Robert Kiyosaki a lot. It was an accident. I had a huge glitch about Rich Dad Poor Dad telling me not to buy it, that it was scammy, etc. Then, I opened up to the page that talked about how the middle class thinks about money.

    It could have been titled, “How Chris Brogan Thinks About Money,” and he could've written “you fool!” after every few words, and I'd be agreeing with him.

    This is partly in there, and in some of his subsequent books (I've bought almost all of them, though I'm finally tiring of the re-use).

    I think money is a strange tool and I'm coming to understand it a bit more every day. Not yet ready to talk about it, but grateful for this post.

  • http://www.ivanwalsh.com Ivan Walsh

    Kiyosaki’s makes a good argument on the compounding value of real estate vis-à-vis other income streams.

    You can see the power of compounding in Social Media when someone (you!) gain a critical mass of followers who help you launch products thru their channels.

    This flips traditional marketing on its head as it’s your followers (e.g. brand evangelists) that do the hard running.

    PS – if you think of money as a ‘currency’ in the same way that trust is a currency then it becomes very interesting.

  • http://chrisbrogan.com Chris Brogan

    I haven't been TO your blog in a while. Quite interesting. I like the redesign.

    Regarding this concept, I've been reading Robert Kiyosaki a lot. It was an accident. I had a huge glitch about Rich Dad Poor Dad telling me not to buy it, that it was scammy, etc. Then, I opened up to the page that talked about how the middle class thinks about money.

    It could have been titled, “How Chris Brogan Thinks About Money,” and he could've written “you fool!” after every few words, and I'd be agreeing with him.

    This is partly in there, and in some of his subsequent books (I've bought almost all of them, though I'm finally tiring of the re-use).

    I think money is a strange tool and I'm coming to understand it a bit more every day. Not yet ready to talk about it, but grateful for this post.

  • Batman

    I'm glad I read your comment before I posted, Chris. You echo many of my same sentiments, and it took me a long time to accept the fact that money is really only a tool to use to the best of your ability, and like any other tool in your box, you have to know not only how, but when to use it.

  • http://www.davemadethat.com Dave Delaney

    Great post Chris. Last year a friend recommended I watch the animated film, Movie, Money as Debt on YouTube.

    I love the way the creator, Paul Grignon, simplifies what money is and how it's created. I think you and your subscribers will thoroughly enjoy it. http://www.youtube.com/watch?v=vVkFb26u9g8

    What do you think?

  • http://www.ivanwalsh.com Ivan Walsh

    Kiyosaki’s makes a good argument on the compounding value of real estate vis-à-vis other income streams.

    You can see the power of compounding in Social Media when someone (you!) gain a critical mass of followers who help you launch products thru their channels.

    This flips traditional marketing on its head as it’s your followers (e.g. brand evangelists) that do the hard running.

    PS – if you think of money as a ‘currency’ in the same way that trust is a currency then it becomes very interesting.

  • http://www.davemadethat.com Dave Delaney

    Great post Chris. Last year a friend recommended I watch the animated film, Movie, Money as Debt on YouTube.

    I love the way the creator, Paul Grignon, simplifies what money is and how it's created. I think you and your subscribers will thoroughly enjoy it. http://www.youtube.com/watch?v=vVkFb26u9g8

    What do you think?

  • http://jdilley.wordpress.com Jacki Dilley

    Your comments about the incredible “wealth” lost and restored during the market's mini-crash beautifully illustrated how weird it is to base a person's or business's value on computer activity.

    Your compelling final statement inspired another thought: understand deeply that it's unnecessary to try to take another's money, because you have something of tremendous value to offer them.

  • http://jdilley.wordpress.com Jacki Dilley

    Your comments about the incredible “wealth” lost and restored during the market's mini-crash beautifully illustrated how weird it is to base a person's or business's value on computer activity.

    Your compelling final statement inspired another thought: understand deeply that it's unnecessary to try to take another's money, because you have something of tremendous value to offer them.

  • http://chelpixie.com/ Chel Wolverton

    Fancy paper that….it costs money to buy and print on. Irony abounds.

    Late night humor FTW.

  • http://chelpixie.com/ Chel Wolverton

    Fancy paper that….it costs money to buy and print on. Irony abounds.

    Late night humor FTW.

  • http://www.rentonkent.com danielT

    It's hard to comprehend the idea of opportunity cost also. A lot of people just don't see time, and things as a potential cost. I wish there were more real money for me so I can pay off my luxury apartment

  • http://www.rentonkent.com danielT

    It's hard to comprehend the idea of opportunity cost also. A lot of people just don't see time, and things as a potential cost. I wish there were more real money for me so I can pay off my luxury apartment

  • http://www.rentonkent.com danielT

    It's hard to comprehend the idea of opportunity cost also. A lot of people just don't see time, and things as a potential cost. I wish there were more real money for me so I can pay off my luxury apartment