Scarcity, Risk, and Wealth Transfers
Three Problems Magnified by the “Box” Approach to Personal Finances

$ Income $
Minus Tax (federal, state, and local) and Basic Expenses (food, shelter, clothing)
= Discretionary Income that must be divided among competing wants and needs.

Scarcity of Money:

(Note: The term “scarcity of money” defines money as being a limited quantity to everyone, relative to their income or wealth level. While his options are far different from most, Bill Gates must also deal with scarcity. He probably can’t afford to buy Canada. And, Argentina too. Choices must be made.)

What we want competes with what we need. Important needs compete with each other. Most “boxes” (financial products and services) have one specific purpose or benefit. We need and want a broad range of “boxes”, and the benefits they offer.

The economic “law of scarcity” dictates that money supply runs out before all the needed and wanted “boxes” can be properly filled... or even started.

Each “box” includes the cost of the product or service you choose plus service fees and profit for the provider. Multiply those costs by the number of “boxes” you need and want. Because of a limited money supply, those additional costs soon begin to reduce the number of “boxes” we can choose; they powerfully affect which “boxes” are chosen; and, they limit the extent that each “box” we choose is filled. In this way, the “box” system aggravates the “scarcity” problem by stealing money from you that could be used to build personal wealth and a broader and stronger financial security. Read on.

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