Transcript 0:00 Welcome to the Purpose Driven Capital Podcast. Today, we're going to take a little different approach. 0:05 I'm going to present you with five different perspectives about the meaning of money, and since I know that you're curious like me, I'm confident you'll enjoy this. So let's dive into the question: what is money? 0:18 How do you define money? What does money mean to you? Now bear with me, but how did the thought of money make you feel? I've been thinking a lot lately about what money actually is. 0:30 We all know what it is and have different relationships with it, but I wanna focus on the question of what is money. Now, personally, I had a lot of questions about money growing up. 0:41 I saw the effect it had on certainly people who didn't have enough, but I also saw how it affected those who had far more than they needed. But I never really gave any thought to what it actually is. 0:53 Because money, it, it's bigger than dollars and cents. For instance, all currency is money, but not all money is currency. 1:00 Currency is that physical form or digital form, the coins, the bills, the account balances we trade, but as you may already realize, money itself is that system of trust that's behind it. 1:13 So I wanted to get some perspective on this particular question. I found clips from some of the most influential financial minds in the world. But before we dive in, please take a moment to like, subscribe, and share. 1:25 It's an easy way you can help us reach more people to help them use money as a tool to achieve their purpose in this life. So let's start with the co-founder of Bridgewater, Ray Dalio. What is money? 1:39 [laughs] So you've mentioned, you know, credit and money. It, uh... Another thing that if I just zoom out from an alien perspective and look at human civilization, it's incredible that we've created a thing that's not... 1:55 that only works because currency, because we all agree it has value. So, uh, uh, I guess my question is, how do you think about money as this emergent phenomenon, and what do you think is the future of money? 2:12 You've commented on Bitcoin, other forms. What do you think is, uh, its history and future? How do you think about money? There are two things that money is for. It's a medium of exchange, and it's a storehold of wealth. 2:30 Yes. That's, that, that... So money, you know, the... So you could say something's a medium of exchange, and then you could say, is it a storehold of wealth? Okay. So those, the... And money 2:44 is that vehicle that is those things and can be used to pay off your debt. So when you have a debt and you provide it, it pays off your debt. So that, that's that process. 2:59 Um- And it's, um, s- I apologize to interrupt, but it only can be a medium of exchange or store of wealth when everybody recognizes it to be of value. That's right. Right. So Ray Dalio gets right to the heart of it. 3:11 It's a medium of exchange and a storehold of wealth. In fact, these are two of the three definitional functions of money. The first two, medium of exchange and a store of value. 3:22 But then there's a third one that we're going to get to in a minute, unit of account. Now, the interviewer, Lex Fridman, is a fantastic interviewer, of course. He brings some great insight here. 3:31 He points out that everyone who uses it has to agree that this thing that's exchanged has to represent value that the other person will accept in their exchange. 3:42 Now, later on in their interview, then their discussion, they, they talk about how this symbol derives its value from being tied to something else with intrinsic value, like gold. 3:51 So when it comes to currency, that's where we get what we call the gold standard, and it's like the United States. 3:57 The dollar used to be tied to an ounce of gold, but that changed in 1971 when the United States left that gold standard. 4:05 The dollar then left that intrinsic value that was there with the gold it was tied to, but that was replaced by the faith and trust in the United States itself. 4:14 That's a whole fascinating concept we can get into later, but Dalio's basically explaining here that money is a medium of exchange and a store of value. 4:23 So now we're gonna get a little bit more esoteric, where Dalio was telling us the foundation, what money does. But that leaves open the question, what is money? If money functions in this way, what's actually behind it? 4:37 So we're gonna take a moment to hear from what Rich Dad Poor Dad author Robert Kiyosaki has to say. 4:43 I'm trying to explain to you, when they tell you to get out of debt, that's stupid because money is debt, and the only way money gets out of debt is via taxes. So all the people who work for money... 4:54 You read Rich Dad Poor Dad, what's lesson number one? Rich people don't work for money. Correct. Money is debt. I use debt as money, and everybody thinks getting in debt is bad. Well, who told you that? 5:07 This is a fascinating perspective. Money is debt. For those of you who've ever listened to Dave Ramsey, you may have jumped out of your seat a little with that stark contrast. 5:17 But Kiyosaki is well known for his philosophy that debt is a useful tool to buy and to own assets, which is a commonly held belief throughout the financial world. 5:26 His book famously contrasts good debt for buying assets that maintain or increase value over time, and then bad debt, which is used to buy liabilities that generally lose value over time. But let's take a step back. 5:39 He said money is debt. This sounds entirely contradictory, but how can money possibly be debt? 5:46 What he means is in a fiat system, so that's a currency system issued by a government, like the dollar, a dollar bill is essentially a promise, an IOU issued by the government. 5:58 It represents value owed to you for the value you've created, but the actual value, the value itself, that's somewhere else. So that brings us to Elon Musk. 6:08 Of course, you can count on him for having a unique perspective, but here Musk really opens the door to understanding money as a unit of account, so that third function of money. 6:17 So as a unit of account, or as he says, a database. People get confused that sometimes they think an economy is money. 6:23 Money is a database for, uh, exchange of goods and services and for time shifting the exchange of goods and services. That's... It's a, it, money is a database. Money doesn't have power in and of itself. 6:35 Um, like you can run the thought experiment of if you're, if you're trapped on a, you know, a remote island, a, shipwrecked on an island, um, uh, and you've got a trillion dollars in a Swiss bank account, it's worthless. 6:48 You'd rather have a can of soup. So, you know, all the Bitcoin in the world and you're still gonna starve. [laughs] The actual economy is goods and services. 6:57 So remember the two functions of money Dalio mentioned were a medium of exchange and a store of value. Musk is pointing to that third function, a unit of account, or as he says, a database. 7:07 See, he views money as a tracking mechanism for the exchange of goods and services over time. It's a way for society to keep score, in a sense keep score, of who's contributed value and who's owed value. 7:19 Now, I wanna be very careful here that the value of the person is not what's being measured here. It's the value that has been created in society or for the economy itself. 7:29 So when you earn money, you've created a claim on future goods and services as a result of the value you've created, and money is a way of carrying that value from what you created to what you get to receive in due time. 7:42 Now, this doesn't necessarily mean that the ledger is necessarily just or that it always carries a consistent meaning. 7:48 However, it is a way of assessing that value as a member of that economy created, as generally agreed to at that time. And, uh, he actually makes a really strong point about this. 8:00 I, I loved his analogy of a trillion dollars on a desert island, because that can of soup can easily have more value than a trillion dollars in Bitcoin if you're starving with no options to buy anything. 8:12 The record, the database, only has value if there's corresponding economy behind it. In other words, there has to be value to offer in exchange for that ledger, for the ledger itself to have that kind of value. 8:23 So we're gonna keep going on with the ledger definition, but we wanna take it another direction now. 8:28 We have the co-founder of MicroStrategy and one of the most vocal and influential advocates for Bitcoin, Michael Saylor. And Saylor applies ano- this, a new dimension to the ledger, energy. 8:40 I am struggle with, struggling with the time-honored question, what is money? Mm-hmm. I need a liquid fungible asset which will store my economic energy for an indefinite period of time. Mm-hmm. Mm. That, that is... 8:54 And so what is money? I'm looking for money, and I, you know, eventually I get to gold, and I'm like, I'm thinking, "Should I buy $500 million of gold?" 9:03 And, you know, my attorney, he looks at me and he goes, "You know, Mike, I remember when gold was $800 an ounce back in the '70s or the '80s, and then it went nowhere for 20 years, and you should be careful about that, and it might not... 9:15 It, it's kinda dead money." Saylor defines money as a liquid fungible asset that stores his economic energy. He's building on all three functions we've discussed, but that phrase economic energy is fascinating. 9:27 It's different than value. When you work, you're expending energy, physical, mental, creative. Money is how that energy gets measured and then stored. 9:39 It allows you to take the fruits of your labor today and then deploy them later in a completely different time and place. That's what makes money such an extraordinary human tool. 9:49 It extends the reach of our work beyond the moment we do it. Now, this also may help explain Saylor's passion for Bitcoin. 9:56 Unlike fiat currency, remember, currency issued by countries which loses value to inflation, Bitcoin on the other hand, has a finite supply. 10:05 It's purely digital, making it easily tradable like currency, but protected from inflation like hard assets because only a limited supply is available. 10:14 Saylor would likely argue that's what makes it a superior store of economic energy. So we've heard from Dalio, Kiyosaki, Musk, Saylor. We're starting to see a pattern emerge. 10:26 Each of them describes money as a tool, not their goal. Money as a tool to achieve their goal. So let's see what finance titan, entrepreneur, and best-selling author of Die With Zero, Bill Perkins, has to say. 10:40 The money wasn't the goal. The life was the goal. The fulfillment was the goal. Right. Money was the tool. Yes. Money is a, it's like hammers and saws, right? 10:49 Like, you can keep buying hammers and saws, you can go to the hardware store, but the, the hardware store, the tools that you get out of there, that's not the goal. The goal is the house and the things you build. Mm. 10:58 Right? And so money is the tool to build your life. And so once I started to think about that, that I wanted to have an adventurous life- Mm. 11:05 A life with scars, a life with mistakes, a life with risks, you know, money had its place in, in building the life that I wanted. I've had many journeys about what will fulfill me and what the money's for. 11:18 But ultimately, it's just one variable out of what I would call the three variables, your wealth, your health, and your time. Like, how do I allocate those resources- Mm. 11:27 Right, over my life to get the most fulfilling life? And so I, I think a lot of people look at money as the goal, and it's not even close to the goal. The goal is a fulfilling life. So Perkins brings us full circle here. 11:41 While the others dissect what money is, he reminds us of what it's for. So many of us are focused on money as our end goal. 11:50 But he recognizes that it's just one variable to what he sees as a fulfilling life, one of the three, wealth, health, and time. And that really puts it into perspective. Money matters a lot less on our deathbed. 12:06 Money can't buy time. It can buy healthcare, it can buy attention and extend some of that time, but ultimately, the rich man and the poor man both have the same problem in the end. 12:16 What I see is when people focus on money as their goal, they're only seeing the first order outcomes, like taking care of immediate wants and needs, which that's absolutely important. It's essential. 12:27 However, I think that what Perkins does here is he helps us to get to that second and third order outcomes. 12:32 The second order outcomes, like how has money helped me fulfill my obligations to my family and those around me, or what has it allowed me to build? Some- what's something useful that I've been able to build as a result? 12:44 But then those third order outcomes of how are we leaving an impact on this world? What are we doing beyond ourselves and our immediate touch? 12:53 We've heard different perspectives with different emphases, but they all point back to money being a tool that acts as a medium of exchange, a store of value, and a unit of account. 13:03 So I guess we could say that money is a tool for human cooperation. Now, while we've looked at money through economic and philosophical lenses, I wanna add a little bit of flavor from my own perspective. 13:14 There's a dimension that often gets overlooked. I would like to add that money is an expression of ethics and morality. They extend like ripples in a pond far beyond our lives. You can kind of visualize that. 13:27 Our lives end, but the money stays, so that ledger continues. Money enables more than just goods and services. 13:35 We use it to create opportunities for people, to encourage certain behavior, and then to fulfill missions, like a scholarship fund, employing people with dignity, uh, giving donations to charity. 13:47 These effects ripple far beyond our lifetimes and become a large part of our legacies. So how about you? I'd love to hear your thoughts. 13:56 Has your definition or perspective of money changed after hearing any of these other perspectives? What do you agree or disagree with? What else would you like to discuss? Go ahead and leave a comment. 14:07 I wanna know what you think. But if you wanna keep going deeper into the meaning of money and how to use it to fulfill your purpose in life, please be sure to like, subscribe, and share. 14:19 Thanks for joining me today, and I look forward to seeing you next time. [upbeat music] We hope you enjoyed this episode of the Purpose Driven Capital podcast. 14:27 If you found this valuable, be sure to like, subscribe, and share. Are you ready to align your money with your mission? 14:33 Discover the Purpose Driven Capital framework, access practical tools, and build meaningful connections to grow your movement and multiply your impact at PurposeDrivenCapital.co. 14:44 The views and opinions expressed in this show are solely those of the individuals speaking and do not reflect the views or opinions of Honeyhive Capital, any broker-dealer, investment advisory firm, or its sponsors. 14:56 The content is for informational and entertainment purposes only. 14:59 Nothing in this content or any communications from it should be treated as constituting financial, investment, legal, tax, or other advice of any kind, or as a recommendation to buy or sell an interest with respect to any investment. 15:11 We look forward to you joining us next time.
