How Money follows the laws of physics
Ole' King Sol knew this ...
Pretty sure I heard it from Mr Trzeciak first.
(My high school physics teacher.)
Then it was drilled into me over 8 years of university studies.
And it was impossible to avoid through 30 years of engineering.
Yep, I’ve internalised this fact:
Energy can be divided into 2 categories: Potential Energy, and Kinetic Energy.
Potential Energy doesn’t move. It just sits there, high up in a tree. Like a bird of prey, waiting to swoop.
Key word there: waiting
Kinetic Energy moves a lot.
And Potential Energy eats Kinetic Energy for breakfast.
(OK, Mr Trzeciak didn’t say that.)
(Bet you can hear Tom Petty’s Free Fallin’, now that I’ve got you thinking about it. Learnin’ to fly ... but I ain’t got wings ... Comin’ down ... is the hardest thing ...)
Takes work to lift a weight from the ground to above your head. (Potential energy.)
Left unsecured, that weight will rapidly gain speed (kinetic energy) and fall, at least until it collides with the ground (and hopefully not your toes).
But Kinetic Energy suffers from a weakness that Potential Energy doesn’t.
Friction.
Travelling through the air, the weight will be affected by aerodynamic drag. (Ooh ... going back to my aircraft days now ...) That’s Friction. It will steal some of that Kinetic Energy as long as it’s moving.
When it hits the ground, what Kinetic Energy it still has will all be transferred to the ground (or floor). Physical waves will radiate outward. Still Kinetic Energy. But as they radiate outward, friction will steal that gradually too.
Of course, the weight could have grown wings and landing gear on the way down, and made a sweet landing.
Now it’s rolling along the runway. But even here, Friction has the last laugh. The wings have reduced the aerodynamic drag somewhat, but not to zero. And there’s Rolling Friction between the tires and runway.
Eventually, brakes or no brakes, the aircraft will come to a complete stop. (Before the end of the runway, I’m hoping.)
You listening up there, Mr Petty?
Bottom line:
When your Energy is all Kinetic ... Friction always wins.
Friction always has the last laugh.
Now, boys and girls ... let’s port today’s physics lesson over to the world of Money.
You gets up in the morning, and goes to that job. Or you sits down at that laptop, and starts back at that entrepreneurial venture. Yessss, my Precioussssss ...
Remember Friction.
What’s Friction in the world of making a living, and salting away your paycheque?
Well, it’s anything that leaves that paycheque between the time you sweated for it and the time it showed up in your bank account.
It’s anything that gets buried in the price of that shiny new widget you just bought, that doesn’t make its way to the Widget Maker’s bank account.
The most obvious name for it?
Taxes.
Now I realise I may have just touched a raw nerve for you.
Those taxes are important! The government has to be supported somehow! Somebody’s got to pay for the roads and bridges and military! Don’t you go knocking taxes!
All possibly true. But park that for a moment.
None of that changes the fact, that as far as your paycheque and bank account is concerned ... Taxes are Friction.
Your paycheque is Kinetic Energy, after Friction has taken its bite out of the pie.
So what beats Friction? What keeps its nassssty little handses out of your pocketses?
Don’t create too much Kinetic Energy. Keep it Potential.
In the world of Money, and Making a Living, this means:
The know-how to create more wealth for yourself ... beats the wealth itself.
King Solomon understood this.
Do not wear yourself out to get rich; do not trust your own cleverness (have the wisdom to show restraint). Cast but a glance at riches and they are gone, for they will surely sprout wings and fly of to the sky like an eagle. - Proverbs 23 v4-5
Wisdom eats Wealth for breakfast.
Potential Energy beats Kinetic Energy.
Know how to make the money you need.
But don’t make it until just before you need it.
Unfortunately, the analogy falls over in two ways:
1. You can’t eat Potential Energy.
You have to make some Kinetic Energy, so’s you can pay the rent and buy those groceries.
Sad fact.
2. Potential energy can degrade with time.
Buy a 9-volt battery and leave in on the shelf long enough, it will lose its charge to the humidity in the air.
All the know-how in the world won’t do you much good if you don’t stay in good health or your brain is addled with Alzheimer’s.
But overall ...
Keeping as much of your energy Potential as possible … is good wisdom.
Who I’m currently reading:
Once Friction has sapped most of my daily Kinetic Energy, and the dishes are done ...
I tend to see who I can learn from on Substack and YouTube.
Currently my two favourite Substack newsletters are
The Daily Bitcoiner (put out by the people at Swan Bitcoin)
Jimmy Song
Both are big pushers of Bitcoin. But Jimmy will pull in articles from all over.
This week, he took me to two think tanks I’d never heard of before: The Niskanen Center, and Palladium Magazine.
Palladium in particular has a ton of thought-provoking articles.
Complex systems and the competence crisis, fertility collapse and why it will kill democracy, how the golden age of aerospace is over …
(That one got my attention lickety split ...)
Rather dystopian. Don’t read them if you’re feeling low, cuz they’ll take you lower.
BUT ... they’re all thoughtful, long-form writing by people who’ve done some thinking.
Interestingly, Palladium is allied with the World Economic Forum, and some of those articles … are not what I’d have thought Herr Schwab would’ve wanted to see.
‘Nuff said for today. Peace out …
The Copywriting Gandalf