I call this chapter “Finances,” but it’s really about “Money.”
Money is the exchange of one item for another at a predetermined value. We could exchange anything as money—a piece of grass, a glass marble, or in the generally accepted case, a piece of a paper or metal coin. A dollar really is worth $0.04 when you get down to its basic cost. But a dollar is valued at a dollar because in our global exchange system, when we compare it to other currencies, the dollar has a value that is determined each and every second against all other currencies. In trader talk, a dollar is always valued at what it’s worth against something else—the dollar against the Japanese yen, the dollar against the European euro, the dollar against the Australian dollar. The same is true on the flip side—the Japanese yen against the dollar, the Australian dollar against the U.S. dollar. So you could say, the dollar is always competing with other countries. So far, we’re still the strongest guy in the gym—nobody else quite matches in breadth and muscle.
People use the dollar—or lots of dollars—to compete. As the saying goes, “Money is the way to keep score.” I heard Sam Zell quote this but I also heard it from many successful people for years. Sometimes people keep score with big houses, perfect kids, and job titles but the ultimate benchmark is money. And it doesn’t matter if you have a lot of money. Someone always has more. I have sat down with people who have hundreds of millions of dollars ...