There are those who have a scarcity mindset, and those who have an abundance mindset. The scarcity mindset says that the pie is only so big and if you’re going to get more, that means that somehow I’m going to get less. The abundance mindset says that it’s possible to make the pie bigger for everyone. As you will see, both these philosophies can be simultaneously true. But it depends on the context.

If you compose a new hit song, and it sells a million copies, you didn’t take a song resource away from anyone else. Someone else can also come along and compose a hit song. There’s no hard limit on the number of songs that can be hits, or that can be written. You can create wealth by creating value in multiple different forms.

On today’s show we’re talking about the different forms of wealth. We’re being asked to believe that there is a new way of accounting. Modern monetary theory says that you can print money and it won’t be inflationary.

But before we can take a deep look at this question, we need to return to basic principles. Tactics sit on top of principles. Just like actions sit on top of the laws of physics. When someone tells me that they can defy the laws of physics with a new technology, I quickly return to the laws of physics. So far, we have not managed to act our way out of physics.

There are three types of wealth. Primary, secondary and tertiary forms of wealth.

Primary wealth is sourced from the land. It is rich soils, thick stands of timber and abundant reserves of ores and fossil fuels in the ground. Primary wealth relies upon rich supplies of fresh water. When we grow wheat in the prairies in Canada and export the wheat to China, we’re really exporting water to China. Fresh water is primary wealth. Arable land is primary wealth. Reserves of oil and copper and lithium and iron and gold are forms of primary wealth.

Secondary wealth is the means of production that has been extracted and/or converted from primary wealth and brought to market. It’s lumber, steel, food in the grocery store, and factories. China has extraordinary secondary wealth, which has relied upon other countries to supply the primary wealth.

Tertiary wealth, better known as ‘paper wealth’ (stocks, bonds, etc), is merely a claim on either primary and secondary wealth. Without either of those two forms of wealth, tertiary wealth has no value.

It was only recently that people somehow forgot this simple logical progression. Two hundred years ago, the answer to the question “Who are the wealthiest people around here?” was as simple as pointing to those who owned the most land (primary) or factories and stores (secondary).

So when people are trading in paper assets, or electronic assets like a crypto-currency, those assets are worthless unless they sit on top of a foundation of either primary and secondary assets.

Let’s look at one of the savviest guys in the world. I’m speaking of Bill Gates. His Family Office is estimated to own 269,984 acres of farm land in the United States. He is estimated to be the single largest farm land owner in the world.

Agricultural land with water on it is primary wealth. With population increasing globally, we will need to produce 70% more food over the next 30 years. The world population has grown 28% since the year 2000. We could be at 9 billion by the year 2037 and 10 billion by 2057. More importantly, global fresh water demand is expected to grow by 20-30% by 2050. We already have vast areas of arable land that have become depleted through a combination of erosion and depletion of the water table. These losses will eventually have an impact on the ability of the world to sustain human life.

That farm land is going to become more and more valuable as demand for food increases.