Before we talk about shares, gold or bitcoin, I need to explain capital theory. It is the foundation of Austrian economics and of everything you will see in this course.
An island and some bananas
Imagine yourself alone on an island. All there is are banana trees. Every day you pick bananas by hand, just enough to eat. All your time goes on that.
One day you manage to save enough bananas not to have to work for a day. You have two options: spend it on the beach, or use it to make a pole to shake the branches from the ground.
If you make the pole, the next day you pick twice as many in half the time. You put the time you save into an axe, a hut, stores for the winter. Each improvement frees up more time to create the next. That is how wealth is built.
Time preference
The Austrian school has a name for this: time preference. Whoever values the future more accumulates capital. Whoever puts the present first consumes what could have been invested. Over the years the gap between the two keeps growing, and not through luck or intelligence, but through that one decision repeated again and again.
And what you are saving is not the bananas. The bananas only keep you alive while you are not picking. What you are saving is time, and the only question that matters is what you invest it in.
The core idea
Wealth does not come from consumption. It comes from savings invested in producing more. Companies that reinvest their profits grow. People who invest instead of spending everything build up wealth. It is the same principle.
In the next module we look at what money really is, where it comes from, and why today’s monetary system is not as natural or inevitable as you have been taught.
Next: Module 2. Money: where it comes from and how we lost it. Course contents.