Year 3 and we’ve covered “What is Money?” and “What is Value?” And now you’re hopefully starting to see where this is going. I own a Wealth Management firm, so what exactly is it that I manage? In my research, most definitions of Wealth are something related to, “a great quantity or store of money or valuable possessions…” Hence, why we defined Money and Value in the last two articles of this publication. The greatest economic revolution in history came from the specialized division of labor. If everyone had to purify their water, grow, preserve, and store their food, chop wood to heat their home, on and on, our standard of living would be as it was hundreds of years ago. So, if a society’s standard of living can increase, that would show that Wealth is variable, and based on that society’s ability to produce goods. In fact, I would argue that overall, Wealth is reflected in the overall standard of living, which is dependent on the capacity of production of goods and services. ( Notice, it’s NOT money .) In Adam Smith’s 1776 publication An Inquiry into the Nature and Causes of the Wealth of Nations , another lesser-known revolution in economics was occurring in how we understand economic motivations, specifically the interdependencies of mutually beneficial, willful cooperation. In the centuries since, we’ve discovered Bastiat’s broken window solution (opportunity cost,) Mises’ Praxeology (the study of human action,) Hayek’s study on liberty’s relationship with Wealth creation, and since 1913 sadly, Marx and Keynes’ anti-capitalistic government intervention and centralization, which consolidates and destroys Wealth. (If you’re looking for a reading list…) If Wealth is to be defined by Money and Value, and the money supply is inflated by a central banking oligarchy, thus devaluing the money; and value is defined subjectively by utilitarian or ordinal preference, then Wealth has no useful finite definition. Surprisingly, I’m okay with this illogical definition, as it points directly at the subjectivity of value, and the calamity of the Federal Reserve’s inflation. Debt-based fiat currency is certainly not money. Value is relative, always changing, and independently judged by all economic participants uniquely. It’s why some people buy Teslas while others buy large SUVs. Both groups are “right” as they seek to fulfil their own needs and wants. The economy is driven by production of goods and services meant for the consumption by the end user. What’s frequently ignored in national coverage of economics and finance is how production is accomplished. It’s ambiguously referred to as the “supply chain” and outside influences like weather or acts of God determine the efficiency of production. I would argue, as would Adam Smith, that the real Wealth is in the specific factors that generate this production: land, labor, and capital. Real estate owners who lease to residential and commercial tenants, storage space, or data and infrastructure facilities understand the productive use of land directly. Those that pay rents understand the necessity of using the space for living, running a business, or parking their RV away from the HOA bylaws. Land also describes other natural resources that exist and are scarce and limited. Labor freely exchanges skill and time to manipulate Land for rent paid from the producer. What we’ve seen after the government’s economic shut down, has been an evaporating supply of skill and time in the labor market, which is forcing employers to pay higher wages, at a time when other input costs are escalating based on higher lending rates after the historical devaluation of the currency. Bad news, and all completely preventable with sound economic policy… The last leg of production is capital. Capital is easiest to think about as capital goods. Goods that are used to create other goods, until the final good is produced for the consumer. Machinery, heavy equipment, cash registers, wholesale inventory, or computer chips are good examples of capital. Capital’s purpose is to create ongoing production. This is the basis of the philosophy of capitalism. Unfortunately, the average government and media indoctrinated American’s understanding has been corrupted into believing in state-backed interventionism in our current corporatocratic, centralized system. Rest assured that capitalism will be blamed on the hardships created by our non-capitalistic system. It’s worked for over 100 years of incrementalism so far. To summarize, if you were stranded on an island starting from scratch, you’d have to accomplish quite a lot. Forage for berries, filter water, make fire, form a blade from rock or shell, chop down some bamboo or lumber, build a shelter, plant a garden, trap animals, on and on. What if you get to the point where you have everything you need? That is Wealth. So, what does this have to do with how we manage Wealth? Well, contrary to what political economists and Wall Street CEOs will tell you, you can’t acquire physical land, commodities, scarce resources, hire labor, or acquire efficiencies of scale in production of goods and services by consuming everything you produce. (Looking at you McDonald’s, Lowe’s, Motorola, Boeing, and Home Depot…) You must have surplus to have equity. For the lay reader, that is savings. You must spend less than you earn. You must produce more than you consume . If you spend less than you earn long enough, you can then use those savings to build efficiencies that either increase earnings or reduce costs. In the business world, it’s buying another oven for a baker, or automation robot for your car assembly line. In the personal world, it’s investing your money to generate a return, dividend, or interest income. The goal is for your capital to generate enough interest, dividends, or return to cover your living costs, to where you don’t consume your principal. How is your capital creating ongoing production? How do you feel about ESG (climate focused investments) or big-pharma, manufacturing in China, or tobacco, guns, or marijuana? How you prioritize your investment into scarce resources, skill, time, technology, and efficiency is how you increase your standard of living. Whether you’re an entrepreneur or a retiree, those are the variables that must be juggled. Matthew 6:21 says “For where your treasure is, there your heart will be also.” At Matthews Wealth Management, we help you prioritize these in line with the people, experiences, and things that matter to you. You may have built your Wealth to $25,000 or $25,000,000, but everyone’s resources and time are scarce and equally valuable. How you deploy your land, labor, and capital and how productive it is to you and your loved ones is the only legacy that you can leave behind. Be active in managing your Wealth, you have the ability and power to have a say in who benefits, if you choose to wield it. Matthews Wealth Management (“MWM”) is a registered investment adviser. Advisery services are only offered to clients or prospective clients where MWM and its representatives are properly licensed or exempt from licensure. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.

In our current economy, this is the biggest question for institutions, businesses, clients, and communities. Maybe it hasn’t exactly been phrased that way, but in post-lockdown society, we wrestle with the concept in numerous ways. What’s a sheet of plywood worth? How about new cars (if you could find one?) Used cars? Gasoline? Computer graphics card? Commercial rent for your business? A job? A house? Minimum wage? Child tax credit? How about just a dollar? To answer this question, we need to be VERY specific about defining value. To be unquestionably clear, value is not price . Value is the usefulness of something in fulling a need or desire . Each human has their own subjective priorities. Goods and services satisfy these priorities. How important was it to buy a car last year? Well, if your old one was broken or needed extensive repair, in today’s age, a car is almost essential. (There’s another word worth defining for another time…) If your car was getting the job done, a new one moves down the list of needs and desires. So, what is price? Price is the seller’s best current estimate of the priority of the good or service for the buyers’ market in relation to the seller’s priorities of needs and desires . If I produce 200 gallons of milk for sale and need hay for my cows to continue to produce, I can price my milk in terms of my need for bales. To simplify, most people measure price in dollars, as that’s the quickest, simplest medium of exchange in a specialized division of labor economy like ours. However, dollars are an intermediate step of the value of what our labor produces as income or savings . If the value of the dollar changes, so does the price, regardless of how much we produce (supply) or our priorities of goods and services (demand.) In a perfectly efficient market, income and asset prices would increase at the same rate as the goods and services prices. Unfortunately, we have entities who affect the markets to become inefficient through money creation, taxation, and ever-changing regulation. That would be the US Treasury, the Federal Reserve, and US Congress. 1. Inflation As new money is added into the supply of all other money, we dilute the scarcity and value of all money in circulation. The most insidious part is that those that receive these dollars first have a tremendous advantage over those that are at the other end. Banks and large corporations receive this new money first. Government intervention has added the unemployed to this list, leaving the workers and savers as the last to receive this devalued money under current American policy. According to the Federal Reserve’s M2SL, we had $15.4 trillion in circulation pre-lockdown, and we’re at $21.6 trillion now, that’s 40% inflation of the money supply. Did our population increase by 40%? No, it was 0.3%, according to census.gov. Did our production of goods and services increase by 40%? No, it shrunk by 2.3%, according to the US Bureau of Labor Statistics. It is perfectly logical to expect tremendous increases in our consumer prices in direct relation to the devaluation of the dollar. You may want to make a mental note to ignore every “expert” who used the word ‘transitory’ last year. Unfortunately, the pricing of labor can’t and won’t keep up, for the identical reason. Middleman intervention and corruption of an efficient market. Unemployment benefits, tax credits, stimulus, Bitcoin/meme/tech stock “profits,” vaccine and mask mandates, state lockdowns, non-essential business closures, green regulation, etc. have been keeping the potentially productive on the sidelines. The labor supply has dried up, and therefore so has the supply of goods and services. Unfortunately, it’s likely more government intervention of price controls and taxation is on the way. When will we learn you can’t plan people’s priorities? 2. New Neighbors Back to the concept of value, how about the value of a house last year? If you already had a house, no big deal, right? Well, what if your house was in San Francisco, Chicago, New York, Minneapolis, Detroit, Philadelphia, Kenosha, Portland? Even if people support the ideology of interventionism, they know enough to run away from the consequences. What does that lead to? A national averaging of our cost of living. A 2,500 square foot house in the suburbs of Chicago sells for $750k, so they move to Fountain Inn, SC to buy a 3,000 square foot house for $450k and pick up two small rental properties on the side. There goes the supply of local housing, pricing out local workers from the housing market. Thank the influx of refugees from areas of inept leadership. Let’s hope these new residents identify the cause of their migration and defeat the definition of insanity when it comes to electing leadership and prioritizing values. 3. American Values That takes me to the final concept of value: moral principles and beliefs. Again, this is subjective to the individual, family, community, etc. Ten commandments, minimal taxes, rugged individualism, property rights, love your neighbor, live and let live, are just a few that come to mind. The thing that united the States for over 200 years was our collective moral principles and beliefs. Since there’s a line in the sand drawn by a growing national collectivist ideology, local unity is now the key to our pursuit of happiness. Matthews Wealth Management understands that these are challenging and complicated times. We also know that there is nearly uniform correlation between your shared values and your financial success, and that is why for over 15 years, people have trusted us with their own values which has led to their financial success. Matthews Wealth Management understands that your values are important to you which makes them important to us. We go one step further: we offer you value. The team at Matthew Wealth Management works with each one of our clients in customized ways to ensure their values grow deeper, and their influence lasts for generations to come. We understand that the recent loss of value of our labor and savings mixed with the changes we are experiencing as a nation and in our local communities, that it is more important than ever before to ensure your values are in line with your priorities of your needs, desires, along with continual personal and generational development. Control what you can control: protect the values of your household and work with someone who values those priorities and strives to see you and your future generations thrive. Matthews Wealth Management (“MWM”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where MWM and its representatives are properly licensed or exempt from licensure. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information, and it should not be relied on as such. The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.