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NOTE Money Is Work

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You may have noticed that the title of my talk is, Money is Work.

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And you're probably wondering, well, what's he mean by that?

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What's money is work mean?

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Well, it comes from this little book called Farmer Boy.

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Anybody read it?

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Hey, cool.

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A couple of people, three people have read this book.

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And it was written by Laura Engel Wilder, but probably, although she's listed as the

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author, she probably didn't write it.

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This woman probably wrote it, Rose Wilder Lane, who was her daughter.

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And I'm going to give away a copy of this later.

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But Rose Wilder Lane wrote this wonderful book called The Discovery of Freedom that

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was published first in in 1943 but she's one of the great ladies of Liberty along

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with Ayn Rand and Isabel Patterson who all hit the scene about the same time in

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the mid-40s. So Farmer Boy comes from the ideas of Rose, probably Rose Wilder Lane.

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We also we like Rose Wilder Lane so much around here we've put her on a t-shirt

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and I'll be giving one of these away. Now I only have smalls and that means that

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well I'm hoping I pick the right card when I give this away. So I've

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got my fingers crossed but we've got other we've got other giveaways to talk

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about but anyway we'll do that later but as far as my talk goes again it comes

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from this wonderful book called Farmer Boy and in Farmer Boy we have this our main character

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is Al Monzo as you remember and which you know I'm tempted to call him Al but I guess

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he's Al Monzo and in the book he's going on 10 years old and around the middle of the

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book the whole family goes to they go to town which is a very special event because most

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the time they're spending time on the farm and in the fields and all that but

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they go to town for the Fourth of July ceremony and Almanzo stops to get a

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drink at the town pump and you probably don't remember town pumps but you did

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actually have to pump them and you know you get a cup and or put your face

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under there and get a drink of water and some of the town kids were hanging

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Well, there's this kid named Frank, and you're led to believe he's kind of an obnoxious sort.

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And Frank has a nickel, and he goes ahead and goes to the lemonade stand, and he buys

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himself a glass of pink lemonade.

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And Frank buys the lemonade, and he smacks his lips, and he taunts Almanzo, mmm, boy,

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this is great.

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You should buy some.

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Well, Almanzo had never seen a nickel, never seen a nickel in his life.

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The only money he'd ever seen was a penny that his father would give him on Sunday at

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church to put in the collection plate.

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Now, as you can tell, money bought a lot more in those days.

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I don't think any of you are putting a penny in the collection plate at church.

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I don't go very often, so when I do, I put a lot more in opinion, because I figure I

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got to make up for the times I haven't gone.

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But anyway, so that's the only money that Almanzo had ever seen.

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And he had never had a nickel, never seen a nickel, and he wondered how a kid like Frank

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could get ahold of a nickel.

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So, Frank told Almanzo, he says, that his father had given him the nickel.

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And of course, he was challenged on this by Almanzo, but Frank says, oh, my dad gives

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me a nickel any time I want a nickel.

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If I ask for it, he gives it to me.

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And so, Almanzo, being a 10-year-old boy, felt, feels a little challenged.

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He's very proud of his dad, and he says, well, my father would give me a nickel if I asked

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for it.

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And the city kid, Frank, doesn't believe that. He doesn't believe the tightwad farmer would give his son a nickel anytime he wanted it.

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So he says, hey, why don't you ask him? Why don't you ask your dad if you can have a nickel?

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Well, Monza wasn't sure. He got challenged. He's not sure if his dad would give him a nickel or not.

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And if you read the story up to that point, which, like I say, is in the middle of the book,

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The Book is a celebration of hard work, frugality.

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There is no time to waste in work or play.

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All they do in Farmer Boy is do chores, learn new jobs, and boy, do they eat.

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I mean breakfast is oatmeal followed by pancakes followed by boy it just goes on and on these

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guys eat and eat and eat and they work and work and work and sleep so you don't think

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there's any way that Almanzo's father is going to give him the snickle and by the way

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Almanzo loves work I mean he loves to learn new things and that's really one of the central

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Frank says, I dare you. I dare you to ask him.

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And Almanzo says, well, I'd ask him if I wanted to, but I don't really want to, so I'm not going to.

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So Frank says, oh, you're scared.

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And you know what's coming next? He's already dared him.

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So he's got to double dare him.

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I double dare you.

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So if you're 10 years old and you've been double dared,

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you know what you have to do.

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If you double-dared, you know what you have to do, you have to go ask your father for a nickel.

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There's no way out, his pride won't let him not ask for that nickel.

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So Almanzo walks slowly down the street to where his dad is standing talking to the wagon maker,

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Mr. Paddock, and the closer he gets, the more he dreads asking his father for the nickel

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Because he doesn't think his dad's going to give it to him.

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And then if he doesn't, if his dad doesn't give him the nickel, then he's going to look

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stupid in front of Frank and all these city kids that he hardly ever sees and be terribly

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embarrassed.

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So, he finally reaches his father, he's dreading this whole thing, and he waits for his father

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I wanted to stop talking to Mr. Paddock, and Almanzo looked up at him, and his dad said,

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what is it, son?

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Almanzo stammers a bit.

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His dad says, well, what is it?

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Father, would you give me a nickel?

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His father looks down at him, and the wagon maker, Mr. Paddock, looks down at him, and

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they didn't say anything.

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and, of course, at that moment, Almanzo just wants to run away. He's just, he wished this

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never even happened. Finally, his father says, what for? Almanzo muttered something like,

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well, Frank had a nickel and he bought pink lemonade. So, Almanzo's father misunderstood,

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started to pull out his wallet. He said, well, it's only right if Frank treated you to lemonade,

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we should treat him.

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So he looked at Almanzo and he said,

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did Frank treat you to lemonade?

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Almanzo waited and he squirmed

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and he finally said, no, father, he didn't.

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Almanzo's dad looked at him, seemed like forever,

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and then he took his wallet out and he opened it up

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and he pulled out, if I can find it,

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he pulled out a big half dollar, big half silver dollar.

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and it'd be something like this Laura Wilder wrote this book in in 1933 this

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is a 1936 half dollar made of silver and Frenchie used to collect those Frenchie

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being my dad and so I have this nice collection of halves that I wouldn't

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have had, except my dad believed in saving coins.

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So he pulled out this big silver half-dollar and asked his son, do you know what this is?

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And Almanza says, well, it's half a dollar.

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Yes, but do you know what half a dollar is?

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And Almanza didn't really know what he meant.

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He didn't know what he meant by the question.

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And his dad said, it's work son, that's what money is, it's hard work.

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Now about this time the wagon maker, Mr. Paddock, chimes in and he says, the boy's too young,

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you can't make a youngster understand that.

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And of course Almanzo's dad says, no, Almanzo's smarter than you think.

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And of course Almanzo during this, he wants to go, he wants to run off and hide, forget

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the whole thing, forget the nickel the whole bit.

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But at this point, Paddock, the wagon maker, is looking at Almanzo's dad with that look

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at, like, he's double-daring him.

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And his father said his boy was smart, so now he's got to prove it.

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Got a lot of guys, young guys, old guys, proving they're smart, you know, taking dares.

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So his father says, do you know how to raise potatoes?

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So Manzo says, yeah, say you have a seed potato in the spring, what do you do with it?

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Well, you cut it up and he says, go on, son, what do you do after that?

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Well, you harrow.

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First you manure the field and you plow it and then you harrow and you mark the ground

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and you plant the potatoes and you plow them and you hoe them and you plow them and hoe

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them twice.

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That's right, son, and then what do you do?

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Then, of course months later, you dig them up and you put them down in the cellar.

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Yes, son, you pick them and then you pick them over all the winter and you throw out

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the little ones, you throw out the rotten ones, and come spring you load them up and

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you haul them to town and you sell them.

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And if you get a good price, how much do you get to show for all that work?

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How much do you get for half a bushel of potatoes?

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Well, if you've read the book, you know that earlier in the book, Almanzo's dad had sold

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potatoes at a dollar a bushel.

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So the answer, of course, was for half a bushel of potatoes, you get a half a dollar.

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And that's what's in this half a dollar.

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The work that raised half a bushel of potatoes.

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Now, I don't know, maybe you've seen a bushel basket.

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You don't see them as much anymore.

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They're this big around and they're about that deep, so half of them would be something

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like that.

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It's a lot of potatoes.

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It's a lot of work.

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It's not only work, it's time.

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Potatoes don't produce themselves overnight.

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So Almanzo looked at the coin and it looked small compared to all that work, this coin.

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And his dad said something unusual.

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I mean, it's something completely unexpected.

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He said, you can have it, you can have that coin.

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And if you're a ten-year-old boy, this coin feels fairly heavy in your hand.

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He said, it's yours.

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And he told him, you can, you've got choices what you can do with this money, with this half a dollar.

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You could go buy a piglet with it.

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I've changed some of the language, by the way, for those who have read the book.

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You could go buy a piglet with it, you could raise that pig, and that pig could have other pigs, which might be worth four or five dollars a piece someday.

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Or, you can trade that half dollar for lemonade and drink it up. You do as you want, it's your money.

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I mean, Almanzo couldn't believe it. He had a half dollar. He'd never, before that time, he had never seen money before except a penny.

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and he had one of those. So he put it in his pocket, he went over to the lemonade stand

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where Frank and the boys were standing. And the lemonade vendor was calling out, step

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right up, ice cold lemonade, five cents a glass, pink lemonade. And Frank asked, where's

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the nickel? He didn't give me a nickel. Yeah, I knew it. I told you he wouldn't give you

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a nickel. No, he gave me a half a dollar. And of course he had to prove it. None of

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The city kids would believe him, so he pulled it out and he showed them.

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They crowded around him, and then at that point they waited for him to spend it, because

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they're right there in front of the lemonade stand.

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So do you think he spends it?

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Those of you who have read the book, you're not to answer.

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Does he spend the half a dollar on lemonade?

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No.

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He puts it in his pocket, he says, I'm going to look around and buy me a good little piglet.

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So, with all the hard work that goes into money, in a free economy, you would only trade your

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hard work for something solid, something that you could see the value in, something that

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you could feel it.

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I don't want to break the glass here.

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And that's what this represents, is this work.

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Now, Carl Menger explained, and by the way, the Austrian School of Economics started with

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with Carl Menger, and he explained that it's not government edicts that create money.

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It's the market that creates money.

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Individuals decide what is the most marketable good that they're going to trade as a medium

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of fixed change.

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Man himself is the beginning and the end of every economy, Menger, and so it is with deciding

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what money is.

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And it was Menger who developed this whole social theory of social institutions which

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which rise as humans interact, each with his own subjective values.

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You all have your own values and experiences, and you bring this spontaneous evolution of

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these actions to create institutions where individuals discover how to make their lives

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better, how to attain their goals more efficiently.

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Nothing is more central to this evolution than the creation of money.

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It makes the division of labor possible and the satisfaction of wants attainable.

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Now, Murray Rothbard wrote that learning that money is a commodity is one of the most important

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tasks in the world.

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He said so often people have talked about money as something more than what it is or

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less than this.

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He said money is not an abstract unit of account, divorcible from a concrete good, it's not

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not a useless token, only good for exchanging, it's not a claim on society, it is not a

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guarantee of a fixed price level, it is simply a commodity.

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It differs from other commodities in being demanded mainly as a medium of exchange, but

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like all commodities it has an existing stock, it has a demand and supply for it.

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It has a price in terms of other goods.

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People buy money by selling their goods and services for it.

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When you go out, if you mow somebody's lawn or clean somebody's closet, you're buying

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their money and you're selling your goods and services to get it.

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Just as they sell money when they buy goods and services.

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If you take that money and you go to the store, you're selling your money in exchange for

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for those goods and services.

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So what makes a good money?

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What is the perfect money?

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Well, Rothbard wrote, it needed to be portable, that's portable, durable, things been around

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since 1936, and I'll probably die with it, somebody will be looking around trying to

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find out where it is, divisible, cut up gold and silver into very, very tiny pieces, highly

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Are you recognizable? You guys probably haven't dealt in a lot of silver, but you probably have the feeling that that might be worth something.

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I know you might think this might be worth something. That ounce of gold right there, you may have heard what that's bringing these days in paper dollars.

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So you recognize that. It's highly marketable, it's homogeneous, and it's stable in its supply. Stable in its supply.

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That's a key. Please remember that.

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So that's why centuries for centuries, gold and silver have been money.

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Not because one person decided, Murray Rothbard didn't decide, Ludwig von Mises didn't decide,

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Carl Menger didn't decide, and more importantly, no committee in Washington, D.C. decided that.

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The market decided that. People traded their hard work for what they believed had value,

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for something they knew that they could trade for other goods that they needed.

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And over time, it became gold and silver.

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See, money helps us get around this knotty problem of a double coincidence of wants.

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In other words, if you want to barter with somebody that aren't highly marketable, it's

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hard to find a person that wants what you have.

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And more importantly, to find the person that not only wants what you have, but that you

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You want what they have.

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I mean, that's a pretty hard needle to thread most of the time.

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And that's why money is used.

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But then government gets involved.

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They take over the creation of money, and they take it out of the public hands, even

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though this gold and silver were minted by the government before that.

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When it started, gold and silver coins weren't.

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The government began printing paper money that was exchangeable for gold and silver,

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and then of course they just forgot about the gold and silver.

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So then they just started printing money.

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And they forced us to take it through legal tender laws.

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Now some of you are going to go to college, and you're going to take economics courses,

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And there's going to be economics textbooks that you're going to open to the money section.

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And you may remember this long, long story I told you about Almonzo, or not, may have

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forgotten it by then.

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But you may read something like Paul Samuelson, who wrote many, many editions to his book

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called Economics, his use of textbook, I learned from it as an undergraduate myself.

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And in his eleventh edition of his textbook, he wrote,

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Most kinds of money tended to be of some value or use for their own sake.

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So far, so good.

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Thus, even wampum had decorative uses.

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Wampum is what Indians traded.

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And paper money began as a warehouse or mint receipt for such metal.

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That's what I just spoke about.

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But the intrinsic usefulness of money medium is now the least important thing about it, he says.

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He says, money as money is wanted not for its own sake, but for what it will buy.

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We wish to use money by getting rid of it, he says.

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Money is an artificial social convention.

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Now remember what I just said Rothbard wrote.

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This is completely contradictory of that.

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He says, the paradox is that money is accepted because it is accepted.

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That's not terribly satisfying, but that's what you're going to get in economics textbooks.

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Now, this is where the real howlers begin.

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By the printing of more or fewer zeros on the face value of a bill, a great or small

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Small amount of value can be embodied in a light, transformable medium of little bulk.

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That means that what he's saying is governments can create paper money with value and they

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can just put more zeros on them, like say this $10,000 or $10,000 dinar from the Bank

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of Iraq.

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Of course, this was the Bank of Iraq, where that handsome gentleman still had his head.

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But when they were printing money, they just created zeros.

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And in Samuelson's view, that created value.

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He envisioned a day when anything so crude as a poker chip, a coin, or a bill will be

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be dispensed with in favor of records that just automatically balance out people's in-payments,

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out-payments over the course of their lifetime.

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So what Samuelson envisioned was really no money at all.

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But then he says, by careful engraving, the value of money can be protected from counterfeiting

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and adulteration.

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The fact that private individuals, you and I, cannot create it at will in unlimited amounts

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keeps it scarce, i.e. an economic and not a free good.

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So governments, in Samuelson's view, who's written more economics textbooks than anyone,

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they are preserving the value of money because they control it.

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They control the number of zeros that are placed.

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So this is the Reserve Bank of Zimbabwe.

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And if you think this happened in some old time where, boy, you can't remember that,

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that bill is from 2008.

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And the Bank of Zimbabwe got to the point that is a $50 trillion Zimbabwe note.

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Well, of course, that wasn't enough. They had to keep printing. And, of course, as

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Samuelson says, this is an economic good. That right there, economic good because the

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government's in charge of it. A hundred trillion dollar Zimbabwe note. We'll move this all

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up. Now, you might ask, what did a hundred trillion Zimbabwe dollars buy? It must have

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So no matter what Mr. Samuelson says, ultimately if governments keep printing, signs like this

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They disappear at a toilet in Zimbabwe.

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They said, toilet paper only to be used in this toilet, no cardboard, no cloth, no Zim

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dollars.

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They didn't want you using this in this.

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It's not exactly an economic good.

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Now let's look at America, you know, this is crazy, Zimbabwe, you know, they're over

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there.

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So let's look at Paul Samuelson. He was born in 1915, he died in the end of 2009, and when he was born, the money supply in the United States was $18 billion. Remember, this was $50 trillion, this was $100 trillion, $15 billion when he was born.

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Born. When he published his first textbook in 1948, the money supply was $148 billion.

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When he died, the M2 money supply in the United States was $8.5 trillion. Sounds like a bunch

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of money. It is a bunch of money out of nowhere. $8.5 trillion pales in the amount on this single

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Bill of $100 trillion dollars.

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So you wonder, you must be wondering, what's government, if they're printing money like

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this, who wants to work for it?

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Why not just drink the lemonade?

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Be like Frank.

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Why forgo consumption and buy the piglet?

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Because you may raise the piglets and they're just increasing the money supply anyway and

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The Piglets won't be worth that much.

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In fact, I wrote a piece recently on Misesorg, and I talked about depression babies saving

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for a rainy day.

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This came from the farm culture.

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And you save for a rainy day because when it rains, it's too wet to plow.

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And when it's too wet to plow, the farmer doesn't make enough money, doesn't make any

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money and certainly the higher-end hens don't.

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Now I remember my grandfather, who was a very diligent sort, and he would use those rainy

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days to do maintenance on his implements in the barn.

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And of course he would say, he would talk down his nose about the farmers who spent

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their rainy days in the bar in town, drinking something stronger than lemonade.

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And he said that when they got back in the fields, instead of having maintained equipment,

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their equipment would break down when they should be making hay.

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And I pointed out in a blog post recently that, and I highlighted the advice of a life

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coach and author who is selling books, a guy named John Stralecki, who advises people

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if they're getting money back from the IRS, they should just spend it on having a good

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Experience.

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They should just drink lemonade, in other words.

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He says, you know, you get a hundred, a few hundred bucks back, a few thousand bucks back,

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it doesn't really matter.

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You should spend it on a vacation, something you'll remember for, you know, the rest of

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your life.

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Why spend a few bucks, save a few bucks?

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It doesn't matter.

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He says, live your life for today.

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Of course, I posted this on Mises.org pointing out how ludicrous this advice is, but what

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do you think the comments were from people who read our site, people who know all about

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this?

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Guy wrote in, he says, I think his advice is spot on, at least given the constraints

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of the times in which we live.

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What's the point in saving if inflation will ravage whatever you manage to accumulate?

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To play by the rules of the game, another wrote, your savings will be puny due to pathetic

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interest rates, erased by inflation, confiscated by the state, so go ahead, enjoy the money

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now while it still has some value.

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Finally at the end, somebody wrote, gotta agree with all the comments, maybe not the

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trips or other experiences, but I gotta feel safer with stuff than I do with Federal Reserve

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notes.

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Listen, these are followers of the Mises Institute.

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Now, I'm reminded of a piece that Paul Cantor wrote.

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He wrote an article about hyperinflation and hyperreality, man's disorder and early sorrow,

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which is a fictional story told in the backdrop of Weimar Germany.

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And he quoted, he said, money is the central source of stability, continuity, coherence

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in any community, hence to tamper with the basic money supplies, to tamper with the community

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sense of value.

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The social order is upended in man's story as people, instead of saving, become speculators.

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And of course, that's what we have today.

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Instead of people saving, we have people speculating, and we have people blowing their money on good

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times.

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Cantor points out that man's portrayal of hyperinflation and covers, quote, something

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psychologically more debilitating happening to the older generation.

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Impetuous high-time preference behavior displayed by young people appears rational in an inflationary

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period, while prudence and conservatism appear to not only be quaint, but just downright

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silly.

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So as man described so long ago, the world of inflation is this illusion of wealth.

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This illusion, look at that, a hundred trillion dollars, I mean, you've got to be wealthy

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if you're carrying one of those bills created by the government printing press.

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But it distorts everything we see, it perverts our judgment.

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So what I urge all of you to do is not to fall into that trap.

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Remember that money is work.

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It's hard work, and it's not to be squandered, it's to be careful with.

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And always remember what money has been for centuries.

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There is no more Zimbabwe, Reserve Bank of Zimbabwe.

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It crashed.

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It's over with.

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These bills?

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Nothing.

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Buy them on eBay as a curiosity.

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Paper money doesn't last.

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This lasts forever.

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This is the real money.

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Thank you very much.