Wednesday 12 August 2009

It does grow on trees

Whilst it is true that money doesn't grow on trees it is also irrelevant. Money is only a way of exchanging wealth, the other being barter.

Wealth grows on trees. Imagine I own a field, the field can cost me say £10. We can say that the field is worth £10 or more correctly that I was prepared to pay £10. But just what is the field worth?
  • I could turn it into a car park and charge £1 a car a day
  • I could rent it to a farmer for his cows to graze in
  • I could plant a tree and sell the apple from it
The field may have cost me £10 but with no more outlay I can create more wealth than the £10 I spent on the field. Wealth is measured in money but wealth is not money.

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