With this post, I begin blogging a book I will entitle Money Matters. When I finish, I hope that both you and I have a better understanding of money and free markets.
Economic systems operate in the context of markets. Without the exchange of goods and services that create markets, no economic system would exist. Learning about economic systems, or markets, should help us to operate more effectively within them. We don’t want to learn about markets in order to change the rules by which they function. Those” rules” have manifested from the interactions of millions of people over thousands of years. We cannot outsmart the distributed intelligence of all those individuals. We can, however, play the “game” and operate in the market more effectively, if we know the rules.
If you want to become proficient at chess, you first learn the rules of play. You then develop strategies, within those rules, for “winning” the game. The same holds true of the “game” of markets.
Most exchanges involve the use of money. Understanding markets, therefore, requires understanding the meaning of “money,” its role in markets, its source of value, its measure of value, and the operation of the banking system that handles money transactions.
In other words, Money Matters.
But, most people do not understand the most important aspects of money. You might say they are like the novice chess player who doesn’t know how to distinguish the chess pieces. Reading the rules does no good for developing a strategy. In his ignorance about a fundamental element of the game he misinterprets the rules of the game, or, worse yet, he starts making up his own rules.
If I have not stretched the chess analogy too far, I mean to convey the idea that people don’t understand markets when they don’t understand money. Because of this lack of understanding, they misinterpret the “rules” of markets. Based on their misunderstanding of markets they attempt to write new rules. Changing the rules does not improve the game. It changes it.
Free markets, unlike chess, do not have winners and losers. All free market players win.
It concerns me that, because people do not understand money, they don’t understand markets. As a result, they operate in markets by unrealistic rules that create winners and losers, instead of just winners. -For that reason, I have decided to blog a book that I will title Money Matters.
I base this book on the premise that: you cannot understand modern markets if you don’t understand money. The real focus of this book will be markets, not money. I will clear away many misunderstands about markets by refuting some of the false assumptions that people have about money and the banking system. Since money exists as an integral part of the market system, I will explain money in terms of market principles and theories. In the end, I want readers, and me, to understand markets and money in a way in which we can make them understandable to friends and acquaintances.
This book represents a work in progress. I strive for clarity and accuracy. If you have the basics of an idea, you will have the tools with which to learn the details.
Please help me, with comments and questions, to improve this book as I move along. I will respond to all comment by either:
- editing existing posts, or writing new ones, if the comments are general, or
- responding in the comments, if the comments are specific for you.
I will also post this preface on the About Money Matters page.