The dictionary defines the word "Value" as being, among other things ---- "The worth of a thing. The rate at which a commodity is potentially exchangeable to others. A fair return in service, goods etc." So one notices the use of the word "worth" in trying to define "value." However when one turns to the definition of the word "Worth," the word "value" only applies when trying to define "Wealth", which is the adjective of the word "worth." For "worth" is defined as follows : " That quality which renders a thing useful or desirable." However "Wealth" is defined as "having value" : "equal in value : " exchangeable ( for ) " etc.

So there is not only a subtle difference between the two, but a tangible difference which somehow it seems difficult to define at times. For in reality ---- What is VALUE !! : And WHAT is WORTH !!

If the value of something changes, so too then does it's worth. And of course so too does "wealth," which in reality is the sum total of "value and worth." Thus one arrives at "the illusion of wealth."

Ultimately, no matter where or how "wealth " exists, it has to be defined in monetary terms. AS MONEY !! It is impossible to define any "possession" in any manner ---other than in monetary terms. Whether it be in the possession of land ; buildings ; commodities ; shares ; bonds ; --- whatever. There is only one common criteria that can be used in defining it's "worth" or "value"----and that is in monetary terms. So in order to have wealth that can be defined, it has to be expressed in monetary terms. Which brings us to MONEY. Thus the value of money is of primary concern when one wants to define wealth. Even of more importance is the protection of the value of any currency, in order to protect wealth. And so we arrive at the first "law" in the protection of wealth, which is in the protection of the currency.

In actual fact, no matter where wealth "lies", it is incumbent upon "authority" ( government ) to attempt to protect it's citizens wherever and whenever possible. For after all, the wealth of it's citizens --- is in reality the sum total of the wealth of the Nation.

If monetary value defines wealth, then the first concern should be the protection of the value of the currency. Which brings us to "Market Forces" and "Fixed Currency Exchange Rates."

Thus if the values of any or all currencies are left to "Market Forces" ---- then any or all governments are responsible for the loss in wealth of their citizens. Wherever wealth lies, the illusion of wealth will also reside AS LONG AS NATIONS FAIL TO PROTECT CURRENCY VALUES.

Putting this factor aside, the manipulation of interest rates --- for whatever reason, diminishes wealth. As an example, let us use any currency, and a manipulation of interest rates, to see how effectively a currency value is diminished. A value of $ 1 Million invested at 6% will generate an income of $60,000 per year. Now take the same investment ----and interest rates that have been diminished to 3% ---and the income derived will have dropped to $30,000 per year. Thus the "value" of that $1 Million has effectively halved. It will now take $2 Million in order to generate the same "income wealth" as was previously inherently within the currency.

So when interest rates are manipulated to encourage consumer spending, it in actual fact has two opposite effects. For those who have income derived from interest rate sources, their spending power dramatically drops, as their income diminishes, while those who have no more "wealth generation" ( salary or wage increases ) are forced to resort to additional debt --- in order to spend more. Thus in reality both parties have suffered a diminution in wealth ---- for DEBT, at whatever interest rate it bears --- is still money "owing" and thus a diminution of future income which has to be repaid.

There are additional problems which arise when interest rates are manipulated. The lower they fall, the greater the temptation to resort to investment on Stock Markets. While one may hesitate to condemn Stock Market investment, never - the - less it is not only a form of "gambling," it is as well a definite harbinger of capital value loss. The more that money "flees" to Stock Markets, the more that share prices rise, that have no relation at all to the "intrinsic value" of those shares. Thus each increase in so - called "value", is in reality a loss waiting to take place.

Recent events taking place world - wide has shown that Stock Market investment is not a guarantee of wealth creation. Debt accumulated by companies has proved to be the nemesis of even the so - called strongest and the best. Above all, it is now being seen that Company Law and Accounting Law and Accounting practice has failed to protect the so - called wealth of investors. Additionally "government" has failed to protect the wealth of it's citizens by not enacting laws and procedures to protect them from loss of wealth.

If one were to invest in land and fixed property, there again is no guarantee that wealth creation will result. Town planning can play havoc with land and property investment. The changes in "zoning" and "land use" can effectively either enhance or diminish value.

Bonds and bond values and the income derived from these investments are seriously affected by many factors. Interest rate manipulation can affect not only income, but as well the "value" of the bond should they be offered for sale before the date of maturity. Additionally the allowance of debt accumulation in relation to net worth when issuing bonds are not circumscribed by or in law, as a safeguard to investors. The same applies with the issue of shares or the acceptance of companies by Stock Markets in protecting the wealth of potential investors.

Commodities are subject to price variances. To this one has to add the fluctuations in currency values in which these may be purchased. Thus while there is no "order" to currency values and commodity prices, there will always be that "wealth illusion."

Economists and politicians are fond of the "cliché'. " The "play" and use of particular words and phrases. Among these are the two words "market forces." The problem with those two words, is not in the reality of their meaning --- but in the unfettered reality of their use. If one were asked what creates the greatest "mayhem" in economics or in economies ---- THAT WOULD BE IT !! Until such time as defined and specific rules and laws --- both local and International are applied to the so - called use of "market forces;" mayhem will rule. The ILLUSION OF WEALTH will always be there ---- while "market forces" are allowed to hold sway without restriction of use.

To this one has to add another three word phrase ; they being --- SUPPLY AND DEMAND. Most often stated as "The Law of Supply and Demand." In other words the law of supply and demand is in reality a part of "market forces." One should perhaps include the "after thought" of the phrase "not always." This is especially so when discussing interest rates. The best use to which interest rates should apply, is in allowing "supply and demand" to determine what interest rates shall be. Never used as a tool to be manipulated for the basic factor of commercial stimulation. This is aptly shown when studying the greatest economic expansion ever experienced in the United States. Specifically during the period 1992 to 2000. During these years Bank Rate stood at 6% to 6.5% and prime rate stood at 9%. These were NOT low interest rates, and at no time inhibited phenomenal growth throughout the entire economy.

Surely this should be an abject lesson in the use of interest rates. When not being artificially manipulated, the supply and demand for "money" should determine interest rates. That is how it has normally functioned down the years all over the world. This applies equally to both domestic and other economies world - wide. Thus bonds are floated at ruling rates, and when being at a competitive level for funds, are pitched at the most enticing rates in order to attract the necessary funds.

International Trade exists as long as there are legitimate currency values to make payment. Thus it should be of the utmost importance for all governments to ensure that currencies maintain legitimate value. For this to happen, ONLY FIXED CURRENCY RATES can ensure this. Surely it can no longer be left to " Market Forces" which continually creates havoc and uncertainty to the value of currencies. As long as this uncertainty exists, so too do we limit and ensure that so - called "Globalization" is but an unattainable dream.

To this we have to add domestic and International debt. How can debt exist without the certainty that repayment will be at the same "value" or "worth" of the currency involved.

Thus in order to protect wealth, a number of factors have to exist. The first is currency value, which can in itself only exist if it's relationship to all other currency values remain constant. The second is commodity prices whose values are fixed by International agreement. These are commodities that are Internationally traded, thus protecting the value and wealth of individual economies. Globalization cannot function to EVERYONE'S BENEFIT until such time as commodity prices are protected and remain constant until changed from time - to - time by consent.

The third are laws to adequately protect investments, no matter in what form these investments exist. The fourth is the control of debt creation in relation to assets, be they related to individuals, companies or Countries. Fifth is the correlation of valid interest rates to the supply and use to which "money" is utilized.

WITHOUT THESE ----- WEALTH WILL ALWAYS BE AN ILLUSION.

ADDENDUM

Essentially the choices were controlled by just a few cogent factors that are relevant to the six; they being the value of currencies --- which in turn defines Wealth. Then there are Interest Rates, which in turn also affect both the value of currencies, and Debt, which has an effect on all of the forgoing. And finally there is Stock Markets and Central Banks which control both wealth creation or wealth degradation Coupled to these last two is of course the calibre of Governance by Politicians who are the final arbiter of all the laws that either govern all these factors, or are the primary cause of all --- because of the absence of necessary laws to safeguard all the factors.

 There is but ONE COMMON DENOMINATOR  to all the above  --- which is MONEY or CURRENCIES. So this is the point we are going to attend to first. Essentially all economies are run and ruled by money. So too is everything else in this world of ours. Commerce and industry, trade and investment, food production and consumption, mining and investment and the creation of wealth for the enjoyment of life and the years of  retirement. BUT WHAT IS OUR MONEY WORTH??

 SAD TO SAY --- PRACTICALLY --- ZILCH!!

 The reason for this statement   --- is that all PAPER CURRENCIES are backed by negligible amounts of TANGIBLE WORTH  --- either HARD ASSETS such as Gold, Platinum, Silver etc. or land and Buildings. To compound the problem, all hard or tangible assets themselves are expressed in “currency monetary terms” such as a “Dollar, Euro or Pound –to value. Say a paper currency note states it’s value as “ 10 units” --- be it Euro, pound or Dollar value. Then erase the print from the paper, and reprint the value as being “20 units.” The value of that piece of paper has now doubled! If printed as 50 units, it has increased five fold, and at 100 --- it has increased ten fold in” value.” However, if there has been no purchase made of gold to back those increases, then the “currency value has actually been dramatically diminished. So when any new currency is issued --- it had better be backed by a similar percentage of gold    The only logical conclusion to the problem is to have just ONE COMMON DENOMINATOR to which ALL DOMESTIC CURRENCIES values can be equated. Be it Gold or whatever --- but definitely not a domestic currency such as the United States Dollar.

 How can we logically value anything that uses as its basis of “value” --- a currency mired in MASSIVE DEBT --- whose currency and debt is in turn backed by negligible quantities of Gold?  To compound the problem, ALL currencies suffer the same problem in different ratios. So we have a situation where Central Banks are both deluding themselves and the World’s population that “all is well with the present system”  --- and that your wealth and life’s savings are safe --- and have a tangible worth.

Having come this far, let us then discuss a few factors that relate to the U.S. dollar and its debt and currency reserves:

 At the end of September of 1999, the total stated foreign currency reserves at the Federal Reserve were stated to be $2,011 Billion, of which gold constituted 15% at that time’s market value or price. By the end of June 2005 the reserves had ballooned to $4,335 Billion  --- and the gold content had SHRUNK TO 9% of that value at that day’s market price of gold. Since June of 2005 many “Trillions “ of dollars have either been printed or borrowed through debt instruments and “lost” through trade imbalance, to the extent that gold held either as part of the “Reserves” or to cover domestic and foreign debt, bears no valid relationship to gold as a tangible worth to the dollars that exist these days.  We would hazard a guess that at the Federal Reserve the gold content at the moment  (September 2009) as a percentage of foreign reserves, is no higher than possibly 5% / 6%. The content to cover currency notes in circulation both domestically or held in foreign reserves or privately held by foreigners is unknown.

 The sum total of the world’s debt in 2008 was stated to be$54.6 Trillion. And one can only ponder what that has ballooned to during the frenetic months of 2009 to the end of August. It has been said that the “Bail-out Package” of the USA to date now exceeds $23 Trillion to date. The latest figures we have been able to ascertain regarding the value of total gold reserves held in the United States as being about 8,000 tons --- which at a price of  $945 per oz. would equate to a value of about $243.2 Billion. The SOVEREIGN DEBT ALONE exceeds $11 TRILLION by mid 2009!!

 So putting aside all else --- $243.2 Billion of gold to the sovereign debt ALONE of $11 Trillion represents a gold cover of no more than 2.2% --- or thereabouts! Perhaps a better perspective would be to compare the US debt ---to that of Canada, which stands at $482 Billion --- placing a per capita debt of $14,300 on each of their 33 million people. The USA with 307 million people and a debt load of 11 Trillion would equate to $35,830 per citizen! The domestic debt (mortgages, bank loans, trade loans, credit card debt etc.) is said to total $46 Trillion  --- placing an additional debt load per person of $143,320. 

So a pertinent question one has to ask oneself ---is what percentage of that is backed by gold when $11Trillion has only 2.2%!

 Japan --- which has long been regarded as the second biggest or “strongest” economy in the world is said to have 1% or less as gold backing to the Yen --- and their total debt obligations as being ---- TWICE THE VALUE OF THEIR GDP!!

 People and “countries” are living “way beyond their means.”  Nobody pays cash for purchases anymore. The frenetic desire to purchase and own every new gadget and widget is based upon the formula of “borrow the money” --- and worry about “repaying the debt” --- later. 

 The total world debt --- divided by the total world’s population --- places a debt load per person of approximately $9,000 on every man woman and child in the world. 

PERHAPS IT IS TIME FOR EVERYONE TO CHECK THE GOLD CONTENT COVERING THEIR OWN CURRENCIES.

 Japan, as said before, is said to have only 1% gold as part of their foreign reserves. China is thought to have between 1% to 2% of their foreign reserves held in gold!

 Gross Domestic Product --- (G.D.P.) is a wondrous concoction created by Central Bankers and economists working in the financial services of economies, as so too do the “theoretical economists” who ply their trade at the universities. It attempts to value the economic “worth” of an economy over or during a period of one year. It is supposed to be the total value of all goods  -- added to the total value of all services charged --- added to the wage costs to have produced those goods domestically. It talks of “contra-ing” exports to imports, and then adding the value of all taxes collected on those imported goods. 

At what point is the value of “goods” determined --- at the factory ---wholesaler or at the point sold at retail level? Are wage costs added only at the retail level At what point is food production and its costs determined? Then of course, a percentage of agriculture or factory produced goods --- may be foreign owned –yet its value defined as DOMESTIC. And finally what value can one attach to all those GDP numbers and their “worth” --- if it has a debt load of $11 Trillion to a stated worth of $14 Trillion which equates to a debt load in the region of 78%!!

Stock markets are presently highly volatile worldwide. Gold on is “a tear” and “stock euphoria” is back in evidence as the HYPE AND THE BALLYHOO is back with us once again. The NEXT BUBBLE IS BEING BUILT! We are mindful of a scene from the movie “TITANIC” --- while the ship sank --- the band played --- and the people drank and danced  --- SEEMINGLY OBLIVIOUS OF THE FATE AWAITING THEM!

 In conclusion --- the politicians seem to be in no hurry to enact the required laws to forever stopping a constant repetition of what is now engulfing world economies. If little or nothing is done to generate an INDEPENDENT CURRENCY --- backed by some formula of tangible worth then we are all living IN A FOOLS PARADISE AND STILL BELIEVING IN SANTA CLAUS AND FAIRIES.