Plain English Finance

Ep. 7 | What Is Money, Really?

• Tre Bynoe • Episode 7

Share episode

Send us a text

Most people think of money as cash in the bank. But in this episode, Tre unpacks a bolder truth: money is just a middleman for value. Joined by his wife Sierra, Tre explains why viewing money as value—rather than currency—can change how you spend, save, and invest. This isn’t your usual budgeting talk. It’s a direct conversation about how our financial system works, why inflation erodes your purchasing power, and how to make smarter decisions with the money you earn.

In this episode, you’ll learn:

  • Why money is no longer a store of value—and what that means for you
  • How inflation works and why it impacts every Canadian
  • What happens when governments can print unlimited currency
  • Why storing wealth in cash may be a risky move
  • How to think about investing as converting value, not chasing returns

Follow the show, leave a review, and share this episode with someone who still hides cash under their mattress.

Tre:

Hello, and welcome to the Plain English Finance Podcast the podcast dedicated to helping you make smart financial decisions. I'm your host, Trey byo, Certified Financial planner and chartered investment manager. I'm a financial planner with TCU Wealth Management, and a Visa Wealth. For more details, or to send in your questions check out the show notes at tre byo dot ea slash podcast. If you want to learn more about me start with episodes one and two. Let's get into the episode. I am joined here by Sierra my wife. Yay.

Sierra:

Yay. I like that.

Tre:

is becoming a, a a a common, a common theme. Um, this time I kind of told you, I don't know, a few hours before we did the podcast. Uh, What was the podcast on?

Sierra:

You said it was going to be about what is money, and actually when you said that, you were like, I'm so excited for this episode. So then I started thinking about it and I got excited about the episode. So that's why we're doing it right now. Actually. It's not our usual time to record, but we're just excited to get this one out.

Tre:

Yeah. So, okay. Well, why, why are you excited about it?

Sierra:

I was just excited because you were excited about it. So I Didn't I kind of thought about my answer, but I didn't. I just said before we started recording, just so everyone knows, I didn't do my homework for this episode, so I don't really know what I'm going to say when you ask me, because I know he's going to ask me. So Sierra. well, he calls me cease. So cease, what do you think money is? And I'm gonna have to come up with some answers. So. Hopefully I. don't mess it up.

Tre:

We'll see, We'll see. Um, so the reason that I'm excited about it is typically when I'm talking about finances it's in very black and white terms. This episode is gonna be more philosophical in nature,

Sierra:

I love. Those kind of conversations. Anyone who knows me

Tre:

know you do.

Sierra:

Let's. talk about psychology instead. No, I'm just kidding.

Tre:

no wrong podcast. Um, okay, so what, what, do you think money is?

Sierra:

so when I was thinking about it, I came up with, it's something that we've assigned value to as humans. So prior to money, we were using a trading system. I'm, I'm just gonna throw out an example. Hey Farmer Joe, I'll trade you one sheep for three chickens because I need chickens. You need sheep, yada, yada. Um, of course not everybody has farm animals to be trade and other commodities, right? So in order to simplify things, I guess, uh, we started using, I wanna say gold, other materials. Um, I. To trade and we assigned value to those materials depending on what it was and so on and so forth. We started just putting it on paper and saying, this is worth a dollar figure. And then we assign commodities and like products those. Dollar figures. Yeah. I'm like, oh man. Okay, Wait.

Tre:

Yeah,

Sierra:

meme comes up where I'm figuring out all these numbers. But yeah,

Tre:

yeah, you're right. Um, in, in some of it, so fundamentally, um, money is used to exchange value. Um, so in that example of chickens and goats or whatever, sheep. Sheep, okay, same Same

Sierra:

man. Uh, sheep have wool. So not the

Tre:

so I said less fluffy. Um, in, in, that example, uh, there there is value being exchanged. there is value in the goats and There's Sheep, there's value in the sheep and there's value in the chickens. Right, right,

Sierra:

right.

Tre:

And the way, and the easiest way for us to exchange that value is to go through money.

Sierra:

mm-hmm.

Tre:

cause it's very inefficient to do it the other way.

Sierra:

Right.

Tre:

So really, um, and we, and you're right, we used, used to use just precious metals. So silver, gold, you had the de nei from like lots of different, Lots and lots of different currencies throughout, throughout, history. that changed in modern finance. So before the money was a store of value. Um, so it means That almost. Building up money would, the value would, always be, there. Um, because everybody kind of used gold and silver and things like that So that meant that like a kingdom could legitimately go bankrupt if you didn't have gold in the coffers. You couldn't just miracle gold out of thin air and pay the army to fight for you. That changed. So modern history is not like that. The government for, for those reasons. Does not use or trade with gold anymore. So There was a time and people often call it the gold standard,

Sierra:

mm-hmm.

Tre:

But where, currency was based on gold and then the US specifically,'cause that's obviously their biggest economy in the world. they. left the gold standard and therefore their debts when they lend money or um, when they, sorry, when they borrow money. Countries can no longer force them to repay it in gold. that meant that the currency wasn't based on gold anymore. It was based on what,

Sierra:

on numbers on a screen,

Tre:

the heck they decided it was. it was. based on trust.

Sierra:

Because I'm thinking, yeah. When I hear things like, oh, the United States is whatever, a trillion dollars in debt, I'm probably.

Tre:

multiple trillion. There's a website for it. I

Sierra:

okay. So yeah, to hear that the United States is that in debt is, we can't fathom it It's, it doesn't make any sense. You know, you say a word, but you don't actually have an idea of what that means. Right?

Tre:

Yeah. It's so big. It's. I mean, it's kind of, it's very difficult to. Visualize even I barely can visualize. Like it is just so much money. It's hard for anybody to really understand it. But what it meant was that the store value, changed. and that's where you get a lot of like finance gurus telling people to buy real estate. right? Because it's like a physical, it's a physical thing.

Sierra:

Mm-hmm.

Tre:

And buy other things that. can store value. And that's actually the, the attractive thing. about gold. Still, people still buy gold. Um, that's the attractive thing about, Bitcoin,

Sierra:

mm.

Tre:

right?

Sierra:

then what, like again, what is Bitcoin? Because, because isn't it just a number on? I don't know.

Tre:

That's a completely, different podcast. but but

Sierra:

don't understand that.

Tre:

the fact is, is that it's, um, there's a finite amount of. them. It's not unlimited, can't just be arbitrarily printed. Therefore again, Bitcoin is something that people just assign value to it. And I have my own thoughts on that. We have we have have a little bit of it, but not, certainly not like, what some people do. Right. Um, but that's that aside. So basically money is now, it is an exchange. it is the middleman between sources of value.

Sierra:

right.

Tre:

So you go To work. and your Boss pays you. You are taking, you're trading your, the value that you've created the company, they're giving you a middleman for it. You then take that middleman and you go to other things that, you find valuable,

Sierra:

yeah.

Tre:

well, hopefully your house or food on your table. or the vacation or what, whatever it is. You know? In the meantime, it is. Stored In the middleman, and Because it's not based off of anything like it used to be, it's not based off of gold or anything like that, that, has a guaranteed, well, not guaranteed, but has a, has a finite resource to it. It's subject to something called inflation.

Sierra:

Right.

Tre:

Everybody knows what inflation is because it's been on Everybody's mind over the past five years. What's inflation? though?

Sierra:

Inflation is. I want to say the value of money decreasing

Tre:

Pretty much, yeah. It's the, the I, I can't even add to that. Yeah. pretty much what it is, the value that of the money that you had decreases, and That's because of the way that the monetary system works. So

Sierra:

Is that because they print more money or how? Like why does that change, I guess? An

Tre:

an increase in money supply is part of it. Um, it's also actually on the current system it's good for the economy because it encourages people to spend. So a good example of that is why would I buy, a reasonable person? why would I buy a car today? Like a brand new car. If I think that a brand new car tomorrow? is gonna be cheaper,

Sierra:

Hmm. Well

Tre:

if it's gonna be the same price to tomorrow or the next year or the year afterwards, there is no urgency to it. So it encourages people. to spend more money now. Um, and that is good for the good for the economy. The economy typically works off something called velocity, like it's how quickly money goes through the economy, um, because that aids tax dollars, et cetera. Like tax is a completely different situation. But briefly, if you think About how much tax um, that like the government collects more tax per dollar than a dollar, if that makes sense. So if I earn a dollar. I get taxed. Let's say I get taxed at 40%, so Okay. so 40 cents of that dollar and then goes to the government, and then I then go and spend that 60 cents and I go give it. I go Give it to you. Yeah. Now you then take

Sierra:

that

Tre:

40% of that 60 cents and that goes to the government. Like it, it just gets, yeah, so there's a, and then you go and spend it on something else and they take a portion. So a lot of it comes from velocity, right? It's just like how much, uh, how you want the money to be circulating in the system to keep it going, basically. So

Sierra:

When you say you want the money to be circulating

Tre:

the general public, do you, you, we want it as well,

Sierra:

money is also good for the citizens.

Tre:

yeah. And It's not just taxes it's businesses. It helps businesses grow

Sierra:

right.

Tre:

et cetera. Uh, I would much rather live in society that has a stable currency than one that doesn't. Right? Like, uh, we, we, look at, we look at, there's been a lot of failed currencies out there. Um.

Sierra:

What would be an example right now of a currency that's not doing as well as another?

Tre:

The Canadian dollar. Um,

Sierra:

yikes.

Tre:

that's that's a small example. There's been places like, uh, like, like even think back, like the biggest, like the biggest one that people would often know about would be Germany probably. Um, where. you know, there were wheel wheelbarrows of money for bread. You know, like, things like that happen in a, in an economy where the, the currency isn't stable. So I would rather it be stable, of course. but that gets me into the the second part of the point which is, uh, how, would this inform what I choose to do with money? Right. And that's, this is a fundamentally, different way that I think about it. versus the vast majority of people. So instead of thinking it, thinking about money, as money, uh, if you make the assumption that money is a terrible store of value, it means that you need to do something with that money as quickly as possible.

Sierra:

Okay.

Tre:

Hence the reason I talk about not having too much cash on hand, et cetera. Wow. But I would rather take the Value And get it into something else that has value. Doesn't matter what it is? per se. Does that make sense? Yes. From What I'm saying? Okay.

Sierra:

think so. I'm going to give it, like, talk about it slightly differently just to confirm that I understand. um, so cash, because if you just keep cash on hand, like you say in the store. Storehouse, I don't know. Um, you have cash. It's going to lose value because of inflation. You know that for sure. It's going to start losing its value if you keep it in cash. Therefore, either trading your cash for a different commodity like gold, a house, like you said, real estate, a business, something like that will change that value from. Money, which loses to inflation, to something that has maybe other risks, but you can diversify those risks by putting your cash in different places. Is that right?

Tre:

K Kind of. You're jumping ahead a little. bit, but Yes. K kind of, um, uh, yeah, yeah, Kind of. So part of it is that I would rather. Hold something that isn't, uh, the, the, thing about money is that it is subject in the current economy. It's subject to what the governments choose to do. that's how that's how it's dictated. Um, people Like to think that it's very stable, but it is only as stable as the, that country's relationship with other countries around the world. Um, compare that to If you was to. hold, uh, if you was to take that money and turn it into cattle, right?

Sierra:

it right

Tre:

like that is, that is a value that is. uh, there's obviously other different, different types of risks, et cetera, but that cattle, no matter what the currency is, you'll be able to trade that cattle for whatever the means of traders at that time,

Sierra:

right. Because humans value. like the cattle won't lose value because we're, oh, I mean, like you said, there might be other risks like disease and things like that, but at the end of the day, cattle creates milk. You can use the hide for things. It's meat if you want. So, and humans need to eat. So that's a commodity that we need, I guess.

Tre:

yeah. So the, the v the, the, value of that that cattle. might change depending on the Currency, that's being used, But ultimately it will store value not in. a currency. Mm-hmm. And when you when you apply that same principle, bigger. Um, it's Why I do not keep cash and I would rather put the money into companies.

Sierra:

Hmm. AKA investing, you wanna own parts of

Tre:

I, yes, And, and people get tied up on like, uh, the numbers going up and down. when they're, uh, when they're investing. But ul ultimately it doesn't matter because it's. Half, the half the numbers that fluctuate. when you, let's say you still go buy the s and p 500, which is the, the US top 500 companies in the us

Sierra:

Mm-hmm.

Tre:

half of the return that we've gotten from that has been from currency. It's, it's been, like I say, half I a chunk over the past few years has been because the Canadian dollar has weakened against the US dollar. So, because the US dollar is stronger, what was stronger than the Canadian dollar over the past few years? The US if you had to purchased the s and p 500 in US dollars, I think, don't quote me on these numbers. I think it was like last year. it did like 20 something percent. If you Held it in, uh, Canadian dollars it's 30 something percent. But the difference. was purely currency.

Sierra:

Man, that is hard for me to wrap my head around. I'm not gonna lie

Tre:

That, that, that's, that's okay. It's, but, but it it is it is one of those things that, um, people relying on. the Canadian dollars to maintain their value against the world and everything that, and against all the other countries in the world,

Sierra:

Mm-hmm.

Tre:

Is Very risky. for reasons that most people do not understand.

Sierra:

So I just want to check it to see if I'm following. So let's say someone wants to invest, but they're, they're saying I only wanna invest in CN Rail in Canadian dollars. That is what you're talking about being risky because now you've, again, like talking about diversification, you're not diversifying your currency. Is that right? Or sort of

Tre:

Not quite. Um, that would still be better because, because CN rail is a provides a service. Um.

Sierra:

Yeah.

Tre:

there is there is other value there that is not tied to Canadian dollars. So if the Canada, if Canada became the 50, was it 53rd state or whatever Trump is talking about, um, and suddenly we switched to US dollars, CN Rail would maintain its value despite us all shifting to, to Canadian to US dollars. Right. So owning a company will. Get through any currency changes.'cause that company.

Sierra:

Provide something. Yes. Is what you're saying. Okay, gotcha.

Tre:

there, there's value to it. that's not just the currency. Yeah. And that's an issue when it comes to somebody holding a lot of cash and just hoping that that cash will continue to be either the medium of exchange. Because that's changed. We've seen that change or hoping that that currency will maintain its value when we know it will not.

Sierra:

So another question then, would that be, I guess some people hold us cash because it's a different currency and it's, I, I wanna say better than the Canadian dollar.

Tre:

That depends on what better means, but

Sierra:

Yeah, well, I guess, yeah. Um, so you're saying, Uh, maybe that's too, I'm getting. Desk too specific, and it's getting too convoluted because I was going to say, maybe it would be, it would be better to invest that money in.

Tre:

you're getting, you're getting, getting too complicated. Yeah. I I would say

Sierra:

I'm getting lost a little, I

Tre:

I would say, instead of the way I view money, instead of viewing it as money, I view it as value. So I go to work, I exchange my time, and I create value. in exchange for That value The company I work for gives me value. What do I do with that value? I can choose to either keep it in currency? which is a means of exchange, or I can choose to put that value into something else that has value outside of currency, outside of that medium of exchange.

Sierra:

Right. Okay. That was really, that made a lot of sense to me, the way you

Tre:

good. Okay, so That's, and that's the way that I view current view money, view currency, which is why I think I am so comfortable with the market fluctuations. I'm so comfortable with the fact that I might buy something that I think has value, and it might not go up in value against the currency that I'm using. I don't know. I'm, I'm not gonna be right every time. But what I do know is that. Holding value in that means of exchange is a poor decision, and has been a poor decision for, for since, since Gold Standard wasn't a thing, right? So it's like I know that's a bad decision, so I'm not doing that. There are reasons to hold a little bit of currency of course, But the bulk of my wealth is. never gonna be stored in a currency that tomorrow could, I might need a barrel, a wheelbarrow of it to buy bread, And that's not up to me. I have no control over what that currency is worth. In, in Germany, when the currency got devalued, if those people, they weren't for a whole bunch of economic reasons and sanctions and stuff, but let's say they were holding us bread making companies, or European. bread making companies, or Louis Vuitton out of France or like holding the global economy, they would've been able to sell that global economy for currency that was now super devalued, but it would've been enough to buy them what they needed.

Sierra:

Mm-hmm.

Tre:

But if they were holding all of their well, all of their value all of their wealth, in. Was it Franks? I can't remember what

Sierra:

that sounds right, but I can't

Tre:

was that Swiss Francs? I can't remember. Marx, Mars, German, mark.

Sierra:

I don't know if that's, I mean, I

Tre:

I dunno. whatever the German currency was. Yeah. If they were holding it in that it got devalued and they needed wheelbarrows of it and suddenly the same price that it cost them to buy a car. was now the same price as it cost them to buy a loaf of bread.

Sierra:

Yeah.

Tre:

Holding money, holding value. in. A means to Transfer value from one thing to another. Bad idea. not doing it.

Sierra:

Yeah. Take that value and make it more valuable,

Tre:

or put it into something that has value. Just any like,

Sierra:

yeah, that's what I mean, like,

Tre:

It doesn't have to be more valuable. Just, yeah. Just not leaving it in a, in a, currency that you don't have control over is terrifying.

Sierra:

Yeah, because we, we haven't. Somebody else has assigned value. Right. And I guess that the majority kind of has a say in that, or governments

Tre:

Governments and governments have a huge say. and Other countries have a huge say and we've seen with trade wars have a huge say. like, there's so much stuff that that is out of our control that has a huge say in what currency is valued at. And it's

Sierra:

And it's just,

Tre:

it's just, a scary thing to. For me, it's, it's way way, way more. scary than the market's going up and down 10% a year. You know, like, To me, that is, I'll do that every day of the week as opposed to leaving value that I've worked hard to get to, to knowingly deteriorate. And I know people think to themselves, oh, but I'm I'm located in Canada, or I don't. So it doesn't matter that. It's just Canadian dollars because I, I live in Canada. the the thing is that because we trade with other countries, we are subject to the global system, the global trading system.

Sierra:

Right.

Tre:

Therefore, it is not a case of, we live in Canada, so we only store money in Canadian dollars. We trade with everybody. if the Canadian dollar we've seen already. if the Canadian dollar halves. against the US dollar. a lot of our cars are a lot more, expensive. Yeah. You know, if the Canadian dollar Hals against the British pound, my tea is more expensive. I don't know, I don't think that's even grown in, in, England, but it's not I for sure

Sierra:

not PG tips anyone.

Tre:

It's, you know, like, so I would much rather store the money in businesses.

Sierra:

That makes sense,

Tre:

right? Businesses in real estate to a degree. But even then, it's kind of sketchy. Uh, farmland, like just things that even gold. I, would rather, I would rather keep it if I had to choose between storing it in Canadian dollars or storing it in gold, I would pick gold.

Sierra:

Wow.

Tre:

right? Like, it's just, I'm not gonna be, storing, I do not store large amounts of value in, in a that, and that's also part of the reason that I won't buy like. Bitcoin or like in large amounts or anything like that is, it's just, again, Bitcoin is designed. as a transactional piece.

Sierra:

It's still like, I, I understand what you were saying earlier, but it is still kind of that middleman,

Tre:

Even gold is, right, so At at least gold though, has how many thousands and thousands of years of history. But you're right, It's still that middleman

Sierra:

just a, it's just a rock

Tre:

Between two sources of value. So, um, yeah, uh, I know that. was, I Hope maybe you followed, maybe you, maybe you, didn't follow.

Sierra:

sometimes our friends say they can't follow us, Trey and I, so I'm hoping it's not too chaotic,

Tre:

It probably is. I'm sure as we do, more of these it will get a little bit clearer. Um, but you and I do we like having These more whimsical, is whimsical the right word?

Sierra:

That's not

Tre:

That's not the right word What the right word. be? Yeah. Like

Sierra:

Um, yeah, I think you said it right, where it's kind of philosophical, but honestly, it's more, uh, this was more of an economics lesson, I guess, and,

Tre:

but there was no, I would say there's no hard and fast. Like I'm all, I'm all about data driven things, Right. And this is definitely More of a. My view of the world versus here are the facts, and figures about, you know, the, the way that it, the way that things Work It's more, it is more like, these are my thoughts. This is what, This is what I think about at night when I'm, you know,

Sierra:

work at 4:00 AM when you wake up and can't sleep, this is what you're thinking about.

Tre:

is what I'm thinking about. Yeah,

Sierra:

It's true though. I, yeah. Even when you were saying, um, you were talking about how money is value or. You are exchanging value. You've, I've heard you say that for years, so I know that's definitely how you view it, but it makes sense. It makes sense to me. So maybe someone out there would agree and say, yeah, that, that does make sense to me as well. And that's a different way I, I'm gonna think about it instead of change, instead of exchanging. Well, maybe that's a different topic. Sorry. I was thinking about exchanging time for money. A

Tre:

A different topic,

Sierra:

but yes, you're adding value and you're, when you increase the value, you're adding, you're getting more value, which is cash, but it's all just value and you reassign it to something else that has value. That was really clear,

Tre:

Yeah, te definitely. Anyway, uh, I think we'll leave it there. Maybe we'll do more episodes like this, maybe we weren't, I don't know. We'll see.

Sierra:

We'll see.

Tre:

Okay, perfect. I will see you guys in the next one.

Sierra:

Bye. Bye.

Tre:

Bye. Bye.

People on this episode

Head Shot

Tré Bynoe CFP®, CIM®

Host
Head Shot

Sierra Bynoe

Co-host