Earning money is an ancient art. Even before money was invented back in the 1500s, when banking was invented, people traded in value. So money is essentially a numerical representation of value. Before banking was invented, the monarch owned and controlled money. The royal mint produced gold coins that were weighed and equal in value to the gold from which they were made. However, for hundreds of years, people have realized that this gold can be filed and shaved. Cutting off a bit of each gold coin before using it in a transaction allowed them to melt the chips down and use them illegally. The monarchies of all countries failed to find a solution to this dilemma and this went on for hundreds of years.

Gold was the first precious metal assigned by authority to represent value and it is this word “VALUE” that I want you to pay attention to. Just as today we cannot eat a dollar bill or sleep under it for shelter, the real gold coin could not be used for food. Therefore, the current gold coin and dollar bill have no intrinsic value by themselves. You can’t ride it, sleep on it, eat it, or even take it with you. All money does is count the value in a decimal numerical nature. So, let’s dwell on this minor revelation.

Let’s say you want a million dollars. You want a million dollars to buy a nice house, get a cool car and go on vacation. You can do all those things with a million in cash. But wait a minute… where does the value lie? If money, as we have just established, is the numerical representation of value, where is the value? This is puzzling. The money, the million dollars on the kitchen table, in hundred dollar bills, represents all of those things that YOU value! You can look at that money and it won’t start or drive. It does not have a door so you can enter and sleep in it.

The only reason money has value is because there are billions of people who agree with your perception that this million dollars has value. If they didn’t agree, he couldn’t spend it for real value. This is getting interesting. Because what we’ve really established is that the value is elsewhere and the only reason money has representative value is because everyone else agrees with you. People from all over the world work daily to get some money. They work day jobs and take risks of all kinds to get some currency of value to buy food, housing and other things.

Rich people know it. While most are looking for representation of value, wealthy people are looking for real value. They get it for next to nothing and sell it piece by piece to people with representative value (paper money). Like paper money, which is a representative value, the actual value also depends on the wholesale agreement on the value. Value resides in human need. The emotion and logical conclusion is where the real value lies. Your own estimate of what is valuable and that of everyone else is what constitutes intrinsic value, the value that you would give up with money to obtain. So, the real value that money represents resides in the individual. If enough individuals also agree with the estimate, they gather in numbers to form a market.

The need comes from one of the five human senses. Visual appreciation of value, Auditory appreciation of value, Kinetic (tactile) appreciation of value, Olfactory (smell) appreciation of value and taste. But there is a sixth, commitment. The sixth (engagement) can be a combination or just one of the five senses. It is this element of commitment that forms a conclusion of value and therefore has monetary value. Compromise is where the mind perceives that intrinsic value is worth more than the representative value you have in your pocket, and therefore you will be willing to part with it in exchange for actual value.

What does all this mean to you and how does it help you build wealth? That should be obvious. Wealth is created by securing real value and selling it to others in exchange for the representative storage vehicle of value or money. When you store your wealth, it grows through interest and capital appreciation.

The point is this, intrinsic value is based on the human perception of others. This being the case, you can create value out of thin air and make it worth the money.