This is an effort from me and primarily targeting to me, to make sense, what is the real importance of money ? is the money itself important and the only parameter to measure our prosperity or it is only important when it facilitates and confirms something bigger. If something else actually giving the worth of money then what is this?
In current age, we all are anxious about our financial future, how to keep up the cash flow with the ever increasing expenses, we are not even sure, how to secure our current inflow in near future also, our savings may lose or won’t be able to keep its value with the inflation and in the changing economy at the time we really need it, what are the financial institutions whom we can trust, where to invest our todays valuable time and effort, infact we are utterly confused to classify what is right and what is wrong in the financial world. Actually all these confusion arise because, we try to justify the practicing financial system without putting attention on what is the law of nature, and more importantly, dare not to challenge the current system even when it got widely diverted from its core principal.
Let us first try to understand why money is needed to the human society? It is basically for three reasons:
A common if not universal parameter to help human brain to optimize its effort at the time of work execution.
Facilitates a collective production execution system base on barter principal or helping in its book keeping.
Helps to cover the rainy days.
Money gives a simplified mean to make decision. Our human brain has a limitation to do optimized planning when the objective parameters are many. Here money comes as an handy single parameter for our optimization and decision making. One reason of this is, money is the most liquid mean to barter and in current global village concept, its acceptability is beyond the border of the country and our imagination. But we want more from it, we expect it to give a predictable purchasing power at any place at any point of time.
We all accept that we can only survive in a social structure based on interdependency, we as a single individual simply cannot produce everything we need to live. And the backbone of this interdependency is barter system. But in reality it never executed as a real time exchange of needs and products between two parties, so we maintain a book keeping system. When we take any product or service ,we accept a mutually agreed way to return other party with something we can produce, more importantly when other party needs it. In the history of humanity this book keeping is done in many different ways from simple mutual trust to exchanging cowry shells etc etc. And current monitory system is also a tool for this.
Deep in our heart we all know that we won't be able to produce more than what we need in every single day of our life, so we try to cover our rainy days with more productive days but how to save them? In the recent past of humanity money served this purpose wonderfully.
But a monetary system fails when it doesn’t confirm its basic purpose just like any other system. When money itself tries to capture all the importance beyond its purpose it will crumble down naturally.
What is important to the humanity is to produce something useful to survive. The products which satisfies the need of the time are valuable and the person or entity capable to produce are important so valuable. When a financial or monitory system is capable to parameterize this with due diligence to these two factors, is a stable or sustainable system. The very moment it diverts from this, it is vulnerable to collapse.
For example US dollar is serving its true value between two parties everywhere in the globe except when one party is US itself. People are exchanging their products and services with reference of US dollar and attempting to balance the barter world wise in USD. But it case of US, their only direct effort is printing papers of currency notes, which in turn gives the purchasing power for anything they needs. I am not considering the intangible effort and practices to keep its importance globally. But the ground reality is US is buying products and services from others in exchange of something which doesn’t have any utility value of its own. Dose it confirms the basic purpose of the monitory system? No, so it won’t last forever, no matter how much effort and attempts are made to keep it going it will collapse one day. But the useful goods and services US can produce will maintain its importance, whether we are doing trade in US dollars or with something else.
Another example I am always interested to discuss about, is the stock market. It is already a financial system which has been diverted widely from its true purpose. Naturally it’s running through a dangerously imbalance ( quasi equilibrium way ) state, according to me, it is just a matter of time when it will fall apart, without state interventions, backup and continuous publicity, and glorifying its health among masses, it has no good reason to survive. What is the real value of a share? When one accumulates some reserve of resources or capital in hand what will he do with it? He would prefer to buy or invest on something which can produce some useful service or commodity for certain period of time covering some amount of uncertainty of the future. At old time in India, people use to buy cattle, keeping in mind once they own them and maintain them, they will produce milk for some period of time, the milk will not only be useful for the family in future but also will always have trading value. After the industrial development a new type of cattle has been found, it’s the industrial organization or companies, So if people know one organization has a proven record of successfully deliver useful product to the society they want to put their money to be part of it, so the annual return to the investment from its operation shows the actual value of the investment. Now the public shares of the organization took a different route all together, if an organization is performing well, people wanted to spend some additional amount than the actual value of the share to be part of its business. Now the desperation of pubic to pay extra amount which doesn’t have any tangible return itself become the driving force of the stock exchange. Running in this mode for some time the trading value go far beyond the actual value. So as long as they can keep this desperation of buying share alive the extra amount can be trade back, so it is totally operating on buyer’s sentiments, and can fall apart anytime. To me investing time and money in stock market is playing a fool’s game, I really feel very bad when people put their hard earn money in this gambling.
I would like to cover few more topics in this light, when I’ll get an opportunity :
Insurance Policies in any form
Real Estate Price
Worth of Gold
How to explain retirement benefits
So today when we are being anxious and worried about the financial future as an individual or country or community looking at the financial trains, we must feel assured knowing that, we may not find a light with the figures from the current financial system, but the financial system will not be same in future, so as long as we are living a life confirming the true principles of the karma chakara, we will be safe. That has driven the humanity till date not the dollars or the share market index nor the oil prices, even long before when these indexes found themselves under the sun, or any form of materialistic wealth human society accepted at any period of time.
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