Wealth vs Money

Money, it's a gas
Grab that cash with both hands and make a stash
--Pink Floyd

People often equate weath with money. Wealth and money are not the same.

Wealth is created by productive work. Productive work combines labor with other factors of production to create economic resources of value. If I am a baker, then my labor in concert with capital equipment (stove) and raw materials (flour, water, etc) creates bread. The bread is wealth, as it is an economic resource that can add to standard of living.

Money is not an economic resource. It is merely a piece of paper or a digital accounting entry. Save for the effort required to create the money, there is no productive work or value creating outcomes.

Envision a world where all people are sloths. Everyone sits around all day engaging in leisure; no one engages in productive work. The only 'worker' is someone who prints money and distributes it to the masses. Everyone receives a pile of dollars adding up to $1 million.

Is this a wealthy people? Of course not. There has been no productive work. Valuable economic resources have not been created. The standard of living of all those paper millionaires will be primitive.

While money does not create wealth, what it does do in modern economies, however, is facilitate wealth transfer. Society currently treats fiat currency as a legitimate claim on wealth. Thus, if someone who does not engage in productive work can procure dollars from the 'money printers,' then they can use those dollars to obtain the bread baked by others.

Those who engage in productive work to accumulate real wealth lose some to those people who hold the freshly printed dollars.

People who equate the massive money printing programs of central banks with general increases in economic activity, i.e., productive work and real wealth creation, are disillusioned. General standard of living does not increase with more money.

Money printing can at best transfer wealth--meaning that some will gain economic resources at the expense of others.