The Role of Money in Our Lives

It’s been several months since our last post and a lot has transpired in that time. The last thing we talked about was the fact that having a lot of money does not automatically equate to wealth. Let’s unpack that more by discussing the role of money in our lives—using a Kingdom perspective (as we always do) to define what money is, what it represents, and its purpose.

History of MONEY

Without giving a dissertation, let’s examine the history of money/currency as used in the world throughout time. This natural understanding will help better form a spiritual understanding.

1st means of exchange: Bartering

In primitive times, if a person had beans but needed a fur skin to keep warm, they would need to find someone who had the fur skin but needed beans—a system of trade better known as “bartering.” If they couldn’t find anyone with this exact item, they might have to continue trading for other intermediate items until they had succeeded in obtaining the original fur needed.

We all learned about bartering in elementary school. In most cases, it worked well as long as the system remained local where needs among people (as determined by their geographic area) were similar. For instance, civilizations in warm climates would have similar needs while those in cold climates would typically have similar needs. The similarity of need could help define the perceived value of items being traded and exchanged, making negotiating fair deals easier.

If two geographically disparate groups wanted to exchange with one another, complications could arise. For one, they might not have as many things in common. The required travel distance in order to trade could also be an issue as well the logistics of transporting the goods themselves. History would prove that as a local means of exchange bartering was a decent system, but as a “global” means of exchange, bartering was not as practical.

2nd means of exchange: Gold

So as the world began to globalize through exploration and colonialism, bartering of the primitive age was no longer as effective. There needed to be a medium of exchange that was universally valued in different parts of the world and could be used for more uniformity and consistency in trade and commerce.

Precious metals checked all of these boxes and gold became a standard for exchange. For the most part, it was deemed as evenly distributed throughout the world and universally accepted as valuable. Now instead of having to barter with actual goods and services, one was able to use an equivalent amount of gold to exchange for his needs and wants.

So problem resolved, right? Not entirely. The gold standard had its own issues. First, it was difficult to obtain initially since it had to be mined out of the ground. Second, before modern transportation, it was difficult to transport in large quantities. Third, it was difficult to divide. And fourth, it was challenging to know real gold from fake gold. These problems led to paper currency backed by gold.

3rd means of exchange: Paper money backed by gold

Throughout the world, countries began using paper currency backed by gold. Thinking globally in the early 20th century, a group of world leaders from various countries met and agreed upon the U.S. dollar as a universal measure for foreign exchange. This became known as the Bretton Woods Agreement. Each dollar, of course, represented a certain amount of gold—about 1/35th of an ounce.

So now, the restrictiveness that once came from the primitive method of bartering, the numerous issues that came from use of physical gold, and the inconsistencies across various foreign currencies were all resolved with this new standard. With paper money backed by gold, difficulty in transporting was much less of a concern and the paper money was much more convenient. Also by using the concept of central banks, the financial system was able to take advantage of many other conveniences like check writing and a complex system of debt (i.e. credit).

Still, there were more problems with this currency system. Besides the fact that money could be counterfeited, greed of banks and the extremely wealthy led to overuse and abuse of credit and debt. Banks would lend more money than they had gold to back. At the first hint of economic concern, panic would set in and everyone would want their money or gold back at the same time, creating financial crises known as “bank runs”. Bank runs led to financial collapses one after the other. Needless to say, the Bretton Woods Agreement was destined to fail.

4th means of exchange: Money backed by …

In 1971, after the failure of paper money backed by gold got worse, President Richard Nixon decided to do away with the gold standard to back US currency. This means that today in the United States, money is no longer backed by an equivalent amount of gold. It is backed by the word of the federal government in consensus with all state governments and citizens that the currency in circulation is legal tender for the exchange of goods and services.

Credits: Carl Menger Center for the Study of Money and Banking

Think about that for a second. Money is essentially a pinky promise with the government that one dollar is worth one dollar of buying power contingent on everyone agreeing to this.

It’s important to note that in these four examples involving bartering, gold, and paper money, the common thread is the exchange of one item of perceived value for another item of perceived value (note the keyword “perceived”). This is an important foundational concept for defining and understanding the role of money from a spiritual standpoint.

Spiritual clarity on MONEY

If it is not clear from the above, I will state it here for clarity’s sake: Money, in itself, has no real value. It is simply a convenient medium of exchange of one thing of perceived value for another. This means its value can only be derived based on what it is exchanged for. One of the biggest mistakes a person can make regarding money is thinking that money, itself, is worth anything without realizing its true worth can only be derived by what you exchanged to get it and what you, in turn, exchange it for.

Limited supply (an illustration)

Imagine a group of ten millionaires stranded in a desert with no food, no water, and no rescue in sight. All they have is a million dollars apiece and each other. Despite being what most would consider wealthy, they lack what they really need in that moment—water and food.

Now, imagine you and I show up with a supply of water or some means to obtain water. You can imagine that we could name our price because we have access to something desperately needed. Because the water was in limited supply before we showed up and the demand for it was high (life or death in this case), we could charge any price and the millionaires would gladly pay. In other words, the perceived value of the water would be many times greater than its intrinsic value under normal circumstances.

In this hypothetical example, the perceived value of water increased drastically based on the circumstances. What made this occur was a result of the supply and demand dynamic—a very limited supply of water versus a great need for the same. When something is in limited supply, its perceived value becomes much greater.

The relationship between TIME & MONEY

Many may read this and draw the conclusion that money is in limited supply which explains why it is deemed so valuable, when in fact, it is the exact opposite—money is not at all in a truly limited supply…even if it is in limited supply to any one individual at a given time. If it were in limited supply, its value would continue to increase over time such that one dollar today would be worth more a year from now. If you know anything about inflation or the time value of money, you know this is not the case.

The value of the dollar has been declining for the last century. According to Kimberly Amadeo’s article The Value of the Dollar Today, the U.S. dollar has lost over 95% of its value since 1913. In other words, it takes approximately $2,600 today to equal $100 dollars worth of buying power from 1913. That is an astounding decrease.

But we know the demand for money is high. When demand is high, perceived value increases, right? So since demand is so high for money, why is the dollar’s value decreasing?

The answer lies in the supply of dollars. As we saw in 2020 and now 2021, the Federal Reserve continues to order the printing of trillions of dollars to offset the effects of COVID-19 and prop up the economy. This injecting of additional supply is not making money more valuable, but less valuable due to inflation. The more something is limited, the more its value grows, but the opposite is true as well. The more available something becomes, the less valuable it becomes. As more dollars are printed and put in circulation, the value of those dollars decreases.

One thing that we can all agree on that truly is limited is time. There are only 24 hours in a day, 7 days in a week, and 365 days in a year. This is why time is so valuable—because it is in truly limited supply for every individual.

The “premiums” on TIME

If you think about it, the value in other things can also be linked back to or derived from the comparable amount of time to which it equates. We essentially pay premiums for things that have some form of time benefit.

Why is Amazon such a valued company? Because its business model saves people time from shopping in the store, time from waiting for shipments, time from reading a book (i.e its Audible segment). Why is medical care so expensive? Because medicine and healthcare help to extend or improve your life (e.g total time on this earth) by getting rid of or treating sickness that would otherwise cut your life short or reduce your quality of life. Why are tickets to Disney World so expensive? Because it allows you to escape from the mundane day-to-day routine and have one of the most magical times of your life.

All these things in some way are associated to premiums we are willing to pay for things that in some way enhance, extend, optimize, or preserve our time. I could list a lot more examples, but the point is clear. True value of almost everything is not based on money, but on the underlying time benefits to which it is linked.

Are you getting a “raw deal”?

I like how Wiktionary defines the figure of speech “raw deal”. It says a raw deal is a deal where a person is led to expect one thing, but instead is given much less than was expected. Many of us exchange our time for money at a rate of about 40 hours per week at our job. We can then use the money we earn in the form of a paycheck as a medium of exchange to purchase goods and services we need and want. This is approximately 2,000 hours a year and about 33 percent of each and every day.

Time is our most valuable asset, yet we exchange a majority of our time for money. This is not necessarily the unfair part of the deal. The exchange where many of us get taken advantage of is when we exchange the money we have earned for things that lose value and create additional expenses (i.e depreciating assets). When we trade a majority of our time, which is our most valuable asset, for money but then use our money to purchase depreciating assets in a constant cycle for years, we are getting the short end of the stick. This is not God’s will for our lives nor for the money He blesses us to obtain.

Remember money has no value in itself. Its value is defined by what it is exchanged for. To come out better in the deal, we have to learn to use a greater portion of our money on things that increase, rather than decrease, in value over time. This is the concept of using money as seed along with the Kingdom principle of sowing and reaping. The world refers to this as investing, while also stripping away the spiritual context of it. Make no mistake—this idea comes from God. He desires that we use this Kingdom principle in order to be fruitful, have dominion, and replenish the earth according to His will (Genesis 1:28).

5 wisdom keys for MONEY

The following wisdom keys represent fundamental insights about money that will empower you to be able to use it more effectively for establishing Kingdom wealth.

1. Money is a convenient medium of exchange

For many of us, our time along with knowledge, skill, and/or strength is traded for our main source of income—our jobs. In this regard, the money we have represents our time in a compacted, tangible form. We have all heard the saying “Time is money.” While the relationship between these two is obvious, the statement itself is somewhat flawed. Why do I say that? Because with “time” stated first and “money” second, there is a subtle implication that money is superior to time. This could not be further from the truth. Money is the compaction of your time. With regards to our paychecks, it is a representation of the time we have given to our employers in exchange for money we can use for other things. As just a medium of exchange, it has little to no value in itself (according to Investopedia, it only costs 15.4 cents to print a 100 dollar bill). Its value is derived from what it is exchanged for. Check out this video that explains this idea in depth.

2. Money is a tool

Because money is generally accepted as a means of exchange, it can be used to obtain things we both need and want. This makes it a viable tool for everyday living. We all have essential needs for living like food, water, shelter, clothing, healthcare, repairs, etc.. Money allows us to purchase or access these things conveniently. We cannot go to the grocery store and show the cashier our timesheet from our job. That time at work has to first be converted to money and then that money can be used at the checkout line. This makes money a tool for fulfilling our basic needs.

Money is also used as a tool to satisfy our desires. For instance, if we desire recreation or leisure, money can be used to take a vacation. If we desire to do something relaxing and therapeutic, money can be used to pay for a massage or buy tools and materials to start a garden or engage in a hobby.

Just as money is used as a tool in these positive examples, money can be used as a tool in negative ways just the same. A drug addict can use money to feed their habit. A person may use his or her money to buy a gun to commit murder. Criminal organizations use money to run intricate raqueteering operations.

3. Money is an amplifier

Money is not evil or good on its own, but it is used in ways that are defined as good or evil. The amount of good or evil that can be accomplished based on one’s level of money reveals another wisdom key. Money can amplify one’s cause. If your cause is good, money can be used to amplify your effectiveness at doing more good. Likewise, if your cause is evil, money can be used to amplify the amount and the extent of the evil you can do.

The Bible says in Ecclesiastes 10:19b that “money answereth all things.” This means that money can be used as a tool to solve problems. The late rapper Notorious B.I.G. had a song that said “Mo’ money, mo’ problems.” In the world’s system, money often creates problems, but in God’s system through divine wisdom and application of Kingdom principles, money is a tool that can solve any problem. The more of it you have, the more amplified your ability to solve problems will be.

4. Money is best used as seed

We just noted that money is not good or evil. It is simply a tool that can be used to do things one sets out to do. The things one sets out to do is what makes the use of the tool of money good or evil. God intends for His people to be empowered to do good and carry out His righteous causes. The more money, we have as His people, the more good we can do.

God’s way for increasing the money we have is through the use of money as a seed along with the divine principle of sowing and reaping. In Week 4, we talked about seed extensively. Money is just a type of seed. In the correct environment, money multiplies, reproduces, and attracts even more money.

5. Money is not evil but the love of it is

The Bible clarifies that while money is not evil, the love of money is evil. As a matter of fact, it is the root of all evil (I Timothy 6:10). When you think about this in a spiritual context it is much clearer to understand why this is true.

Money is a medium of exchange to trade one thing of value for another. It has no value itself. When you love money, you are in love with something that was created to be temporary. Love for something temporary with no value in and of itself creates a misplaced, undeserved affection—something not worthy of your love.

Furthermore, love for money causes people to hoard it and be more susceptible to greed. Hoarded money can’t be used as a tool to build God’s Kingdom or as seed to produce a harvest. It is difficult for a greedy person, no matter how rich, to operate in generosity.

Summary

In God’s Kingdom, money has a purpose. Knowing that purpose and placing money in its proper role is key to accumulating wealth. As the late Dr. Myles Monroe said, “When the purpose is not known, abuse is inevitable.”

Takeaways

Money, in itself, has no real value. It is simply a convenient medium of exchange of one thing of perceived value for another.
Money’s value can only be derived based on what it is exchanged for.
One of the biggest mistakes a person can make regarding money is thinking that money, itself, is worth anything without realizing its true worth can only be derived by what one exchanges to get it and what one exchanges it for.
When something is in limited supply, its perceived value becomes much greater.
Money is not in truly limited supply, even though it may be for any one individual.
Time is in truly limited supply. There are only 24 hours in a day, 7 days in a week, and 365 days in a year.
Time is our most valuable asset.
5 wisdom keys regarding money: 1) money is a convenient medium of exchange, 2) money is a tool, 3) money is an amplifier, 4) money is best used as seed, and 5) money is not evil but the love of it is.