Money as a Claim on Scarcity

Most people think about money in terms of numbers on accounts or bills in a wallet. But this perspective falls short. Money is not a thing — it is a claim. More precisely: a claim on scarcity. Whoever holds money holds an abstract promissory note that society recognizes as an entitlement to draw upon scarce resources.

This idea is not new. It traces back to the early work of Carl Menger, who formulated the subjective theory of value, and to Ludwig von Mises, who understood money as a spontaneous order. Yet it remains underexplored — particularly in an era when money supplies grow exponentially and the relationship between money and real value increasingly blurs.

Scarcity as the Foundation of Value

An object is valuable because it is scarce and someone wants it. This insight is both trivial and profound. Air is essential for life but, in most contexts, not scarce — so it carries no price. A rare painting is not essential for life but extremely scarce — so it commands a high price.

Money encodes these scarcity relationships. It is a coordination mechanism that enables billions of people to simultaneously signal what they want and what they are willing to give up. Every transaction is, at its core, a scarcity alignment.

For my work on financial data systems, this insight is central. Valuing a company — as we do at AlleAktien — is fundamentally the question: How much claim on future scarcity does this business represent?

Money Is Not a Store of Value — It Is a Promise

The popular notion of money as a "store of value" is misleading. A true store of value would need to maintain its purchasing power over time. No fiat money system in history has achieved this permanently. Inflation erodes purchasing power, and what one euro can buy changes constantly.

More precisely: money is a promise with a variable redemption rate. Its purchasing power depends on how much money circulates in the system, how productive the economy is, and how much trust exists in the institutions that issue the money.

This understanding has concrete consequences for investors. Leaving money in a bank account does not store value — it accepts that one's claim on scarcity slowly shrinks. Investing is the attempt to preserve or enlarge that claim by converting it into productive assets.

The Three Layers of Money

Money operates on at least three layers simultaneously:

• Medium of exchange: It enables the trade of goods and services without requiring direct barter.
• Unit of account: It makes different goods comparable. Without a common unit of account, a complex economy would be impossible.
• Temporal coordination instrument: It allows the deferral of consumption — and thus investment. This third layer is most frequently overlooked.

When someone works today and does not spend the money immediately, they shift their claim on scarcity into the future. This is the mechanism that makes capital formation possible in the first place. Without this temporal dimension, no economy could grow beyond its daily subsistence needs.

Why Inflation Is a Moral Problem

If money is a claim on scarcity, then uncontrolled money supply expansion is a dilution of that claim. This systematically hits hardest those who hold their wealth in nominal terms: savers, retirees, people on fixed incomes.

The winners of such dilution are typically those who have first access to the new money — an observation known as the Cantillon Effect. Richard Cantillon described as early as the 18th century that the distributional impact of new money depends on where it first enters the economy.

This does not mean that every form of inflation is reprehensible. A moderate, predictable inflation can serve as an economic lubricant. But the distinction between predictable and surprising is crucial. Surprising inflation is a form of expropriation because it violates existing contracts and expectations.

Money and the Question of Justice

The philosophy of money inevitably touches questions of justice. If money is a claim on scarcity, then the question of who holds how much of it is a question of distributing scarce resources. This explains why discussions about wealth inequality are conducted so emotionally — they concern not abstract numbers but real claims on real goods.

My personal approach is pragmatic: I believe that wealth created through genuine value creation — through products that people voluntarily buy, through systems that democratize information — is legitimate. The work on Eulerpool is built on precisely this conviction: financial data should be accessible to everyone, not only to institutional investors.

Money in the Digital Future

Digitalization does not change the essence of money, but its form. Whether euro, dollar, or a digital central bank currency — the fundamental dynamic remains: money is a claim on scarcity whose value depends on trust and productivity.

What changes is speed and transparency. Digital systems make it possible to track money flows in real time, reduce transaction costs, and expand access to financial systems. But they do not alter the fundamental equation: the quantity of claims must stand in a meaningful relationship to the quantity of real goods.

For investors, the central task remains the same: convert claims on scarcity into those assets that create real value over time — companies that manufacture products people need, systems that increase efficiency, technologies that solve real problems.

FAQ

What does "money as a claim on scarcity" mean in concrete terms? It means that money has no intrinsic value but derives its worth from the ability to be exchanged for scarce goods and services. Money is a socially recognized claim on limited resources. The more money in the system, the smaller this claim per unit — which we experience as inflation.

Why is this perspective relevant for investors? Because it clarifies that money in a bank account is not "safe" but loses purchasing power every year. Investing is the attempt to preserve one's claim on scarcity by converting money into productive assets — businesses that produce real goods and whose value increases over time.

How does the Cantillon Effect relate to this theory? The Cantillon Effect describes that new money creation does not affect all market participants equally. Those who first access the new money can still buy at old prices, while prices for everyone else have already risen. This demonstrates that the dilution of claims on scarcity is distributed unequally.