Long ago, wealth was directly linked to physical resources and people received compensation for their labor in food and material goods. When money replaced barter, and especially when usury (charging interest to lend money) became moral and legal, the definition of "wealth" became blurry. The abstract concept of money has allowed people to become rich by depleting natural resources, marking up land prices, manipulating financial data, selling disposable goods, deliberately rendering products obsolete, pushing illegal drugs and exterminating species for body parts. Money doesn't discriminate between ethical and immoral activities, and many people don't care about the difference; the ones setting the prices in most cases. Even in the "legal" economy, millions of office workers are kept employed by money itself, not something physically tangible. The virtual (monetary) economy may grow indefinitely on paper but the real (physical) economy can only support a finite level of consumption.
Over 90% of money is literally created out of thin air via loans and the expectation of debt repayment. This "fiat currency" is the foundation of the modern grow-forever economic system, which has been pillaging the natural world in the name of phony "growth." After anti-usury laws were overturned centuries ago, people came to accept virtual money as real, ethical and sustainable. The opposite is true, but few are willing to overturn the system or make usury illegal again. Even putting a cap on interest rates meets rabid resistance, since so many jobs are vested in virtual wealth.
It's critical to understand that humans don't create matter where none existed before. We just manipulate existing resources into forms that are useful to us. The volume of usable matter on the Earth actually decreases each day as we clear forests, burn oil and throw away goods manufactured from minerals. When trees are cut and turned into houses, nothing is actually being "produced," but we see it that way because people draw paychecks from such activity. The same applies to petroleum that's converted to gasoline or bauxite that becomes an aluminum can.
A major motion picture may reap millions in "income," but from a resource standpoint it consumes energy and raw materials whether it's a hit or a flop. Actors and athletes make unreal sums through media replication and advertising revenue. As the world's highest paid athlete, Tiger Woods' career earnings will easily exceed $1,000,000,000 (one billion dollars). Skilled or not, is one golf star really worth the combined lifetime income of roughly 500 average U.S. households? Grossly inflated wealth creates unrealistic expectations among impatient young people. Crimes are often committed in a vain attempt to live beyond one's means.
People believe that because money is exchanged for work performed, said work is somehow adding to our pool of resources, but paper-money is just a form of compensation, not something with intrinsic value. This distinction has been lost on many who view the planet as a giant bank rather than a chain of ecosystems that keep us alive. So many jobs are detached from natural wealth that money is literally cloning itself. In service economies, people make money from the mere existence of other people, allowing cities to "create" more jobs than rural areas. It's almost like cannibalizing the living. Money is also made by displaying and burying the dead, whereas in nature they revert to soil without help. Tourism allows people to live in scenic places (like islands) at much higher densities than the land could support naturally. Examples of money distorting innate value are endless. Growth keeps feeding on more growth.
Stock-ownership creates paper wealth that can rise and fall dramatically on a whim and may have little to do with the actual value of a company or its products. The 1929 Market crash precipitated the Great Depression even though the U.S. remained unchanged in terms of material resources. Clearly, money alone was a false measure of wealth, and largely speculative. One man can be in the right place at the right time and make a fortune that would support dozens of families, while another can work like an ox and have little to show for it. A farmer may barely scrape by as he struggles to feed humanity, while a lawyer can profit from the hardships of that same farmer and retire like a king.
Hedge fund managers make money from the fact that others are rich to begin with. The whole financial services sector plays that game. Too many elements of the economy are built on parasitic relationships and mathematical algorithms that presume infinite abundance. Brain-power and the management of complexity has replaced physical work as the most efficient earning tool but it's a false measure of wealth. The collapse of ENRON in 2001 and the 2008 mortgage crisis are prime examples. You can't generate money out of thin air indefinitely.
The insurance industry rakes in billions of dollars from perceived risk and produces nothing but debt for the majority of customers. This is especially true for the medical field, where everything seems to cost twice what it should and it pays to tell people they're sick when they may not be. Big Pharma has become a multi-trillion dollar racket, pushing dubious drugs on a crowd of legal addicts. All these bloated profits get treated as GDP with no moral justification.
Realtors and home-builders are engaged in a land-depletion racket that thrives on the myth of endless greener pastures (or rather, brown, with so much desert construction). They charge people huge amounts of money to live on land that was once free for the taking. Rising land prices provide some control over runaway growth, but land-ownership is an artificial construct. Nature put no price tags on land for billions of years, treating it as a commons, like air and water. This isn't practical anymore but it illustrates a point. A real estate developer selling a house to an insurance broker is an ecologically parasitic transaction. The deal relies on conjured paper money from both ends. The net result is the conversion of live wood to dead wood and wilderness to pavement. Nature sees no compensation, just more acreage loss each day.
Banks generate cash from thin air by charging people to lend money and paying them to store it (compound interest). Companies like Microsoft and Oracle have become insanely rich through digital replication of software. Programming is difficult and effort is needed for constant upgrades, but the big profits come from artificial duplication. There is truth to the impression that software giants are unnaturally rich. Wouldn't everyone like to do a day's labor, replicate it millions of times, then sit back to collect profits?
Musicians enjoy the same benefits, or used to during the reign of CDs and LPs. Paint on canvas can generate unreal profits compared to the initial effort, especially after the artist dies. Money's value is notoriously subjective. People earning inflated wealth tend to spend it by depleting more than their share of resources. The hypocrisy of rich environmentalists draws deserved flack, though it's trivial compared to the total consumption of average earners.
Passive income from rental properties and royalties is also an abstraction. Salesmen make money with the simple act of raising a price but the physical product remains unchanged. Governments waste money daily, and make-work jobs are propped up because employees don't want to lose their safety net. The price of a new car, which drops immediately after it's purchased, is a good example of inflated value. Money paid for ivory and other non-essential animal parts threatens the existence of entire species. A man-made price is a poor measure of a resource's true (or future) value.
If resource prices are set by people with no grasp of limits, the market can't be trusted to predict the future. Man has kept resource prices artificially low to sustain highly consumptive lifestyles. Petroleum is one of the best examples. The 1970's oil shock was caused by a U.S. production peak/shortfall that got shifted to the Middle East and elsewhere. Since then, we have permanently burned trillions of gallons of petroleum, yet prices still allow some people to commute in 12 MPG vehicles. It may take a global oil peak or $5/gallon gas (U.S.) for reality to hit everyone. Conservation has historically been based on OPEC pricing whims, not how much oil remains in the ground.
Another disturbing thing about the artificial value of money is the social welfare system. Today's welfare recipients only survive because other people generate cash and give it to them via taxation. In the old days of barter these people would have perished or resorted to stealing (which many still do). A safety net may appeal to compassionate people, but from an ecological angle it just amounts to resource consumption of the worst kind. If people are going to pilfer resources they should at least sweat a little in the process! White-collar types are receiving another form of welfare because the money they earn wouldn't exist without others doing the hard, physical work. You can have farmers without bankers but not vice versa. Since real wealth is originally derived from physical matter and physical labor, the poor will always outnumber the rich, and no amount of economic growth will change that. Who would pick the crops, repair the cars and clean the offices?
The increasing need for two-income families and the worsening plight of the homeless indicate where we're heading with money as our guide. Huge national debts go far deeper than fiscal irresponsibility. The U.S. Federal Reserve Bank can literally create money from thin air, based on payback forecasts of continued growth using all of the above tricks. The term "moral hazard" came to the fore during the huge 2008 financial institution bailouts, which just pushed underlying money-gluttony onto the U.S. government's back.
Perpetual economic growth assures a vicious cycle of rising expenditures and debt, which nature can no longer sustain in the physical realm. We go deeper into debt every time we divert a river, drain an oil field, deplete an ocean fishery or strip a forest beyond renewal. We need a steady-state system where prices are calculated from an ecological viewpoint, not just an economic one. This will be difficult (given human nature) but wise choices often are. Until we assign a conscience to money, free-markets will follow the pyramid scheme of greed and endless growth.
