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the Nomadic Threshold of Money, part 1 (updated)

The idea of non-metric money is about as counterintuitive as you can get. Money after all exists primarily if not solely because it can be calculated. Yet a non-metric, lets call it nomadic, money does exist. Pinning it down of course is a whole other story though...

Lets start with a small experiment. Without looking how much cash are you carrying on you? Or if the answer is currently nothing, how about the last time you went out?

Now count the cash, get an exact figure, down to the pennies. Odds are it's not exactly the same as the first answer is it? Do the math, figure out the difference, this is a very rough indicator of what your own personal nomadic threshold might be. Maybe it's a few pennies, maybe its a few bucks, maybe its a million dollars, in a dream that is.

The nomadic threshold is a phase change, a point where the behavior of money changes, much the way the properties of water transform as it turns from liquid into ice. On one side of the threshold is money as a number, as something you calculate, or at least try too. On the other side is liberation, money that you don't even think about, money whose metric value is just something you might notice in passing as you hand it over. Money you forget is in your pocket, handbag, sock or where ever else you may keep it. Money that's not worth your time to think about, but may well be worth a candy bar or a beer.

For most people the nomadic threshold is far too low. In Williamsburg, Brooklyn there is a bum who hangs out by a freeway exit, begging for change. Walk past him and you'll notice something odd though, the entire sidewalk shimmers with the copper glow of pennies. As the bum collects share change he sorts out the pennies and tosses them on the ground. The pennies lie so far bellow his nomadic threshold he'd rather not even deal them. And if the multitude of "give a penny, take a penny" jars found at cash registers across the country are any indications, plenty of other Americans agree.

Thankfully your own threshold is probably more than a penny, you can probably buy a candy bar or cup of coffee without much of a thought, nor will you need to go to ATM after that purchase, unless you already had need to make that visit. Some people though have much higher thresholds. Prince Jefri of Brunei may well be the most blatant example, his playboy adventures at one point squandered nearly half of his countries fantastic oil wealth on luxuries like a stable of 40 prostitutes kept year round in a London luxury hotel. Odds are he was buying sports cars the way you might by a pack of M&Ms, without much concern as to the cost.

In a classic experiment first conducted over 50 years ago psychologists asked subjects to draw a circle the size of a quarter (an American coin for those of you in other countries), without actually looking at one. What they found was a direct correlation between the size of the drawn circle and the economic status of the subjects. The smaller the circle was the richer the illustrator. The quarters just didn't seem as big in the richer kids minds as they did to the poorer ones. This wasn't exactly the expected result, but its not a particularly surprising one either, money is a much bigger deal when you don't have it than when you do. Money just doesn't mean the same thing to a rich person as it does to a poor one.

While the results were statistically valid, it's important to note they are not an ironclad law. You can't ask people to draw quarter sized circles and then figure out their net worth off that drawing. Some rich people draw huge circles, money is still a big deal for them, while some poor people draw small circles, perhaps they don't care too much about how much money they don't have. Legend has it F.W. Woolworth once kept his secretary overtime for an hour to look for a quarter he had lost in his office. That office was in the tallest building in the world at the time, and Woolworth was one of the country's wealthiest individuals. Still I suppose its shouldn't shock us that a man who built his fortune on "five and dime" stores clearly did not see a quarter as being below his nomadic threshold.

So how does one move a nomadic threshold? Clearly having more money helps. Sometimes it helps to much, there are plenty of stories of lottery winners who find themselves broke and destitute a few years later. A sudden influx of cash into your life or a sudden increase in the numbers in your bank statement can skyrocket your nomadic threshold to a dangerous space. In the case of the unlucky lotto winners they may well have thought they had more money than they'd ever need. A sports car, free drinks for you friends, a trip to Europe... It must be marvelous, until that morning you wake up and realize it's all gone.

If you've ever gotten a large check and then a short while later found yourself wondering "where did it all go?" you've experienced a small version of this first hand. And the answer to the question is simple, it all slipped away beneath your nomadic threshold. And then once you realize it your threshold will come crashing back down to earth, hopefully before you run out of money for the rent.

So money itself can move the threshold, the more money you have the less you need to worry about it, that's pretty much common sense. But money alone can not be the only factor, or else we'd never find a millionaire (from the times when that meant something) on the floor of his office with his secretary looking for that lost quarter. Nor would you have someone like the legendary miser Hetty Green. Adjusted for inflation she may well have been the wealthiest woman ever, yet she lived in the cheapest boarding houses and ate the cheapest meals of beans or pie she could find. She wore the same dress for decades, with various stocks and loans to the city of New York hidden in secret pockets. She owned several railroads, but rode only in her ancient carriage. When her son broke his leg she pulled him out of the hospital out of fear they might charge her for his medical care. He ended up with gangrene and an amputated leg. Clearly money alone can not move the threshold, there is a personal psychological component as well.

Even the stingiest of people have their week points though, Hetty Green's was apparently her dog, who it was only half joked she fed far better than herself. The nomadic threshold moves not just with money itself or within the realms of psychology, but also from place to place, circumstance to circumstance. One of the more pleasant manifestations is vacation, something perhaps you'd like to be taking right now. Vacation is great precisely because it produces circumstances where you do things you'd never do in your day-to-day. Maybe it's lie on the pristine white sands of a Carribean beach, or climb the steps of an ancient Cambodian temple, or maybe its just spending money on things you'd never even consider...

It's a classic tourist moment, your are standing in a store, the owner speaking to in an alien tongue. In your hands is a pile of coins and bills, funny colors, different shapes. How much do you owe her? How much is this stuff even worth? You don't really know and for a second at least you don't really care. You hold your hands out to the owner, and let her pick the right amount out for you. Trusting, hoping or perhaps not even caring if it's the right amount.

Nothing can me more nomadic, more liberating than being able to not care about how much money you are spending. Yet being able to not care is not the same thing as not caring. Hetty Green shows us the stingy side, while lottery winners sometimes end up on what could be called the overconfident side. If you don't care how much money you are spending you might have an enjoyable run, a few days, weeks or perhaps even years of a life in flow. But if you are spending more than you are taking in in the process you just might find yourself lying on the wrong side of the nomadic threshold in the worst way. Perhaps not all nomadic thresholds are created equal. Some are sustainable, no matter how little you think about those purchases below the threshold, they'll never add up to enough to drain your resources away. Others are perhaps dangerous, a nomadic threshold of money that sits too high will inevitably collapse, unless of course and unexpected infusion of money props it up.

A credit card is a tool for shifting the nomadic threshold, often in the wrong direction. It almost certainly was not originally designed as such, but it certainly has taken on the function with a gusto. What's so devious about the credit card is the way it completely divorces the need to calculate from the act of purchasing. You swipe the card, some program on a server across the country runs the numbers and either authorizes or declines. You sign the slip a month later the numbers confront you.

Of course it doesn't force you not to calculate. You could keep a mental note of how much you've run up on the card this month, cross reference it with your household budget and your anticipated income. I'm sure that's what the credit card people would say you should do, and some people probably do something of the sort. But being capable of doing something just is not the same as actually doing it, and problems of this sort are often best addressed through potential and probability. Credit cards create the potential to enter what could be called a false nomadic state of money, and the probability of entering it is high enough for it to be a real issue for a decent amount of people.

A false nomadic state of money is one which is produced via the application of an outside force, a factor independent of you and your money. It is important to note that there is no value judgement to the "false", for say a shopaholic it's probably negative, but for someone like Hetty Green it may well have done her a world of good. There is also no direct correlation between a false nomadic state and a sustainable one, although by looking at both you may well be able to make out at least the beginnings of a value judgement, a false nomadic state that pushes someone into an unsustainable one is, let's say, problematic.

The credit card is only one of many ways to enter a false nomadic state. A smooth salesman, a couple beers, an attractive member of the sex of your choice, so many things can do the trick. Sometime the item itself, the object of purchase, can do it. Maybe it "calls you", "speaks your name", maybe you need to have it. Maybe you've done all the calculations and its too much, yet somehow when you come back to your senses you've pulled the trigger, you own that beautiful thing, at the expense of your bank balance.

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