It Doesn't Take Money To Make Money

“It Doesn’t Take Money To Make Money”
by
Kurt A. Schultz

I’m sure you’ve heard the old saying “It Takes Money To Make Money”. This statement isn’t completely true, but it is an accepted adage. I do not want to take a look at what part of this saying works; I want, with this article, to take a look at some of the ways that this saying fails .

First of all, I want to point out that people that can communicate clearly can think clearly. I believe that when you cannot think clearly, you cannot communicate clearly. Furthermore, when a person is of above-average intelligence, they will adapt their communications to be appropriate for the intended recipient (including malapropisms that are commonly understood), although this is a trait that geniuses sometimes lack. Also, there are the unusual cases where people that can think clearly have problems communicating clearly (Stephen Hawking comes to mind).

Now this points to the idea that if you hear someone communicating in a manner that is not clear, they probably cannot think clearly (although there is the distinct possibility that they know better and are communicating poorly on purpose). Also, when you find yourself communicating poorly, try to see if it is becoming a habit on your part. That kind of habit can lead to poor quality thinking, as a by-product of unintentional Neuro-Linguistic Programming.

When a popular misconception prevails, that doesn’t cause the misconception to become true, it merely means it is popular. If the Society is a sane one, the misconception will eventually be revealed as false and will be replaced with something else (hopefully by something with more veracity).

So when you hear someone proclaim “It takes money to make money”, you should try to assess whether or not they are communicating poorly on purpose. If it is a conversational shortcut designed to imply that only the rich can get richer, you will have to decide whether to set them straight or to let it pass without comment.

“What is money?”

First off, most folks haven’t got a valid feeling for what money is. Sure, they can tell you what the local currency is called, but they don’t know if it is really money or if it is something that represents an abstract of that idea. Federal Reserve Notes aren’t the same thing as United States Dollars, even if they are called “Dollars”. A note for some thing cannot be the same as that thing.

Let us assume, for our first case, that “money” means “gold”. In this case, the saying becomes “It takes gold to make gold”. Since I haven’t yet heard of any economical way of transmuting the elements, I don’t think there is any human agency that has the ability to make gold. We have to rely on Mother Nature to make the gold for us. Lacking the requisite God-like power, there is no way for us, as Humans, to make gold. It doesn’t matter if we have the gold to begin with or if we don’t, the second half of the saying is false. We can manipulate gold, but we cannot create it. Gold has to be found.

“I can do that!”

Looking at it another way, the Government has the authority to make money. When people try to make money, they get prosecuted for counterfeiting. It’s the government that has the authority to create and standardize the money. Maybe the saying should be “It takes governments to make money”.

This points to one of the ways that folks commonly lie to themselves. Very few people in this world are actually able to “make money”. Those that do are workers at the Bureau of Engraving and Printing or the Mint (to whatever extent, that is, that these agencies “make money”).

“How much money did you make last year?”

When you hear the expression “I need to make some more money”, there are probably at least two lies involved: the person probably wants this (instead of “needs” it), and they are referring to increasing their income instead of actually creating money (furthermore, the “more” part is usually debatable – it’s probable that they don’t want to reduce their expenses like they should). Of the two or three lies expressed or implied here, there’s only one that’s germane to this article. I don’t actually make money, but I can get income .

So let us change the saying and make it a bit more accurate. Let’s work with “It takes money to increase your income”.

I believe that this is the meaning that most people intend when they say “It takes money to make money”. But you don’t normally have to pay to get a job. I know that it sometimes happens that way (like hiring a job agency to find you work, or needing bus fare to go downtown for an interview, etc.), but for the most part the agreement is “I’ll pay you this much to do this work for me.” (not “I’ll pay you this much to do this work for me if you can show me that you already have money ”).

“A cornucopia of abundance”

How many immigrants landed in America penniless, and yet found ways to get meaningful incomes? If the saying “It takes money to increase your income.” were true, those immigrants would still be penniless – or dead.

Ok, it could very well be that someone with money helped out those that had none when they first arrived. Once the poor were self-sufficient, the folks with money didn’t need to help them out any more.

I’m here to tell you that this is still going on today. There are times when I hear people say “It takes money to make money” and my reply is “But it doesn’t have to be your money!”. One of the great ways to gain wealth is to take on good debt (debt that you arrange for others to pay off for you). When you borrow other peoples’ money and invest it in something that pays you back more than it costs you, you gain a greater income than if you merely invest your own money (especially if you don’t have any to invest!).

“I think, therefore I am rich”

In it’s pragmatic form, “money” offers a convenience for us that barter can only occasionally meet. At its basic level, “money” is a philosophical abstraction – an idea - that’s designed to ease the friction associated with barter. Maybe the saying should be “It takes ideas to make ideas”.

The main points that I offer to you with this article are these:

“Money is an idea. In order to make a better income, it takes better ideas!”

“Wealthy is an attitude. When you say you’re broke, you know more money will come in. When you say you’re poor, it implies forever.”

Good investing to you!

Kurt Schultz

April 5, 2005