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What is money? Is it the exchange of energy between two parties? Is money the root of all evil as many in this economic downturn will claim? Is money a gift or a burden from the “gods” deserved or not?

Let’s establish one thing right up front: money is NOT your life’s blood. It may feel like that sometimes, but it is not. Your money is not your worth. YOU, no matter whether you are rich or poor, beggarman or thief, you, yourself are NOT your money. You are far more valuable than this thing we call money. If everything were taken away from you and you were standing alone on a desert island without roof or food or companion, you would still be valuable, just because you are—because you exist. So before we begin any discussion about money understand this is the starting point. Your value as a person has NOTHING to do with the value of your bank account. Get your head around that concept before you read on.

That being understood, how you acquire money, save money, spend money and live with money is important, and we will discuss some of these issues in this and the next few posts in this series.

The focus of this post: What IS money?

I contend that money is simply the exchange of energy. I do something for you, i.e. provide a service or some concrete product by expending my energy, my time and talent and you “pay” me in a form of currency that reflects an appropriate exchange of your energy for mine. Let me give you an example: I’m a farmer who plants seeds, grows crops, brings them to market and offers them to you in exchange for “payment.” In the days of barter, that payment might have been in the form of some product you created, i.e. a pair of shoes, or a cooking pot you made. But barter doesn’t always work, and expended energy (the weeks of toiling in the fields) may feel unbalanced against your energy (spending a few hours cobbling leather sandals together). Or, more likely, you may need my vegetables, but I don’t need the shoes you are bartering. To create a balance and common understanding, a form of “currency” that equalizes energy was established. What then is the value of the vegetables I am offering? The price is set at what ever the buyer is willing to spend at that moment. No more and no less. And that’s all money is. An exchange of energy.

The next question is how do you get this energy in the first place? And what do you do with it once you have it? Is it possible to have too much? not enough? What does having too little or too much do to your life as a whole?

What do you think?