Analysis from the Perspective of Microeconomics:

1. “Zero Price Effect”: This is a crucial concept in behavioral economics, specifically used to explain the magic of “free.” Traditional economics posits that price is merely a quantitative indicator; a price decrease increases demand, but a drop to zero is just a linear extension of that demand. However, behavioral economics points out that “free” is not just a zero price; it represents a qualitative leap, completely altering people’s decision-making patterns.

   • Reducing Transaction Costs and Psychological Friction: Buying anything requires paying a cost, not just monetary; it includes decision costs, time costs, and even the psychological “pain of paying.” “Free” completely eliminates these costs and friction. People don’t need to weigh pros and cons or consider if it’s worth it; they simply “take” it, greatly lowering the difficulty and psychological threshold of the decision.
   • Risk Aversion and Preference for Certainty: Even for a very small item, if it is “free,” it means “zero risk.” In contrast, buying anything that requires money carries potential risks, such as receiving something undesirable or of poor quality. Free items guarantee “at least no loss,” and this certainty of gain is highly attractive to risk-averse individuals.
   • Value Perception Bias: When the price is zero, people’s perception of an item’s value becomes distorted. We tend to overestimate the value of free items, even if we don’t actually need them. This bias may be because “free” activates the areas in our brain associated with “gaining” and “reward,” making us feel like we got a bargain.

2. Misjudgment of Opportunity Cost: Traditional economics emphasizes opportunity cost—the value of the highest opportunity forgone in order to obtain something. Rational people weigh the benefits of acquiring a free item against the opportunity cost incurred (such as the time spent queuing or the space occupied). However, under the temptation of “free,” we often underestimate or ignore the opportunity cost.

   • Neglecting Time Value: To claim a free item, we might need to queue, run errands, or spend extra time. But the halo of “free” often makes us feel that this time expenditure is worthwhile, even ignoring the fact that this time could have been used for something more valuable.
   • Space and Resource Occupation: Free items frantically acquired, if unnecessary, might occupy space in the home and even become trash. Yet, when claiming these free items, we often fail to fully consider these subsequent costs.

3. The Psychology of “Getting a Bargain” and Transaction Utility: Richard Thaler’s theory of “Transaction Utility” suggests that when people purchase goods, they experience two types of utility simultaneously: Acquisition Utility (satisfaction derived from the item’s actual value) and Transaction Utility (the feeling derived from the difference between the actual price paid and the psychological reference price).

   • Super High Transaction Utility from “Free”: When the price is zero, transaction utility reaches its maximum because the actual price paid is far below the psychological reference price (even if that reference price is low). This massive transaction utility makes us feel like we “won big,” even if the item’s actual value is low or even negative.
   • The “Better Not Take It” Mentality: “Free” reinforces the mentality of “better not take it.” Even if we don’t need it, the thought that others are rushing to grab it, or that this opportunity might disappear, makes us more prone to impulsive acquisition.

Analysis from the Perspective of Psychology:

1. Loss Aversion: This is a crucial concept in both behavioral economics and psychology. People feel the pain of a loss more intensely than the pleasure of an equivalent gain.

   • Fear of Missing Out on “Free”: “Free” is often packaged as a limited-time or limited-quantity offer, creating a sense of scarcity and urgency. This atmosphere triggers our loss aversion, making us fear missing out on this “free” opportunity, even if we don’t truly need the items.
   • Weakening of the “Sunk Cost” Effect: For items that require payment, we consider the costs already invested (sunk costs) and aim to maximize their utilization. But for items obtained for free, since no monetary cost was incurred, the sunk cost effect is weaker, making us more prone to impulsive acquisition, even if the item might eventually be idle or wasted.

2. Social Proof and Conformity: People tend to imitate the behavior of those around them, especially when uncertain or lacking information.

   • The “Herd Effect” and Group Behavior: When we see many people frantically acquiring free items, we assume the item must have value, or at least “not be a loss.” This conformity increases the frenzy, forming a “herd effect.”
   • Fear of Exclusion: If everyone goes to claim the free items and we don’t act, we might feel excluded from the group or miss out on some kind of “social opportunity.”

3. Instant Gratification and Impulsivity: Humans are naturally inclined to pursue instant gratification, and “free” perfectly satisfies this psychological need.

   • Quick Acquisition of Pleasure and Satisfaction: The process of claiming a free item is simple and fast, immediately providing the pleasure and satisfaction of “getting a bargain.” This instant gratification reinforces our impulsive behavior.
   • Reduced Inhibitory Control: Under the lure of “free,” we are more likely to relax our guard, reducing our capacity for rational thought and self-control, thus making us more susceptible to impulsive decisions.

4. Anchoring Effect: When people make decisions, they tend to rely excessively on the first piece of information they receive (the anchor), even if that information is irrelevant to the decision.

   • “Free” as a Value Anchor: “Free” can serve as a value anchor, making us more likely to accept subsequent offers that seem “worthwhile,” even if those offers are not truly worthwhile.
   • Contrast Effect and Value Amplification: The existence of free items might make us feel that other items requiring payment are “more expensive,” thereby amplifying the perceived value of the free items.

Summary:

Our frenzy in acquiring things we fundamentally don’t need, especially under the temptation of “free,” is the result of the combined action of multiple factors in microeconomics and psychology. “Free” is not merely a zero price; it is a powerful psychological lure that utilizes our Zero Price Effect, Loss Aversion, Social Proof, Instant Gratification, and Anchoring Effect to make us behave irrationally under impulsive pressure.

So, what’s next? We can launch a marketing campaign called “Free Temptation.”

Most people only know what they truly want when they reach a specific situation.

• We want to buy a sports bike, but don’t know which model, until we see a champion of the Tour de France advertising a certain model, and then we can clarify our desired purchase;
• We want to replace speakers, but don’t know what kind, until we hear a set that is better than the original, and then we are clear;
• We don’t even know how to live, until relatives or friends one day give us a sudden realization that the life they are living is exactly what we aspire to.

Everything is relative; that is the key.

For example, Sam the TV salesman, when grouping the TVs on display, plays the same kind of trick on us: 36-inch Panasonic $690. 42-inch Toshiba $850. 50-inch Philips $1,480.

Which one would you choose? Sam knows very well that customers find it difficult to calculate the value of different TVs. (Who can accurately know that the $690 Panasonic is a better deal than the $1,480 Philips?) Sam also knows that after giving the customer three choices, most people will choose the $850 model. This feeling is like an airplane landing between two sets of runway lights. Can you guess which brand Sam placed in the middle? Exactly! It is the one he wants to sell the most!

One phenomenon is that a high price tag on a main course on a menu can increase the restaurant’s profit—even if no one orders it. Why? Because although people generally won’t order the most expensive dish on the menu, they are likely to order the second most expensive. For this purpose, the restaurant introduces a high-priced dish, which can entice customers to order the next most expensive dish (thus cleverly increasing the profit margin of that dish).

1. “Sentence Integrity Check”: First, examine the structure of the sentence.

   • Actively look for the subject: Who is making this statement? If the subject is missing, ask yourself: Who is performing this action? Who is the recipient of this state?
   • Identify passive voice and generalization: Be wary of excessive use of passive voice (e.g., “The problem has been solved,” without specifying who solved it) and generalization (e.g., “People believe,” without specifying which people). This is often done to obscure responsibility or create the illusion of universal consensus.

2. Rapid questioning to dig into the intent and impact behind the information:

   • “Why am I seeing/hearing this?” (Tracing the information source):
     • What channel delivered this information to me? (Advertisement, news, social media, friend recommendation, etc.)
     • Does this channel itself have a bias or vested interest?
     • Did I actively search for it, or was it passively delivered to me?
   • “Why has it gained such high traction in the current information flood?” (Analyzing the propagation dynamics):
     • Does this information cater to a specific social emotion or anxiety?
     • Does it use narrative methods or emotional language that is easily relatable?
     • Are there signs of artificial promotion (e.g., massive shares, bot comments)?
   • “Who benefits from this?” (Stakeholder analysis):
     • Who will benefit from me accepting this information? (e.g., the merchant selling the product, the institution promoting the view, the group seeking political support, etc.)
     • Is this benefit a direct economic gain, or an indirect social or political influence?
     • Is there a clear conflict of interest?
   • “What is this information ignoring? / What is it hiding?” (Identifying information gaps):
     • Does this information only present one side of the facts?
     • Have important background information or counter-evidence been omitted?
     • Is ambiguous or misleading language being used to conceal the truth?
   • “What is the purpose of this information? What does it want me to do?” (Behavioral guidance analysis):
     • Does it want me to purchase a certain product or service?
     • Does it want me to accept a certain view or stance?
     • Does it want me to take a specific action (e.g., vote, donate, share)?
   • The significance of focusing on “specific people”:
     • Trace the source: Instead of passively accepting “Studies show,” ask: Which research institution? Which researcher? What is their methodology? What is their past research record? Is there a conflict of interest?
     • Evaluate expert qualifications and stance: When you hear “Experts believe,” ask: Which expert? What is their professional background and qualification in this field? Have they publicly declared their stance or vested interest?
     • Be wary of anonymous “experts” and “studies”: “Experts” who are unwilling to disclose their specific identity, or “studies” from unknown sources, often have lower credibility.

3. Slow down the reaction speed, avoid emotional decisions:

   • Don’t immediately believe or share: Give yourself time to think and verify.
   • Be wary of tactics that create urgency and moral coercion, such as “limited-time offers” or “If you don’t share, you’re not Chinese.”
   • Control your emotions, preventing judgment from being swayed by fear, anger, anxiety, etc.

4. Actively seek multiple information sources for cross-verification:

   • Don’t rely on a single source.
   • Look for sources from different backgrounds and perspectives to compare.
   • Pay attention to the views of authoritative institutions and professionals, but maintain a critical eye.

5. Cultivate the habit of questioning authority and “common sense”:

   • Dare to challenge so-called “expert opinions” and “universal knowledge.”
   • Use evidence and logic to test the truthfulness of information, rather than blindly trusting authority or what is habitually accepted.

6. The debate between Einstein and Bohr fully illustrates the following points:

   • Even in the most advanced fields, there are different viewpoints and interpretations: Science is not monolithic; even authoritative scientists may hold different understandings and explanations when facing complex problems. Scientific progress is often achieved through this debate and questioning.
   • “Authority” does not mean absolute correctness: Both Einstein and Bohr are authorities, but their views are not entirely correct, or rather, they are exploring different facets of the truth. Their debate encourages people to think about and understand quantum mechanics more deeply.
   • Selective citation can be misleading: As you mentioned, advertisers or anyone with a specific stance can completely selectively cite the views of Einstein or Bohr to support their own arguments while ignoring the other party’s voice. This creates the illusion of “authoritative support” for the audience, making them believe that a certain view is absolute truth.

7. Common propaganda tricks:

   • Seeking “favorable experts”: They will look for experts whose views align with their product or philosophy and heavily promote these experts’ “authoritative endorsement.”
   • Ignoring or diminishing opposing views: For experts or studies with different opinions, they will selectively ignore them or use various means to diminish their credibility.
   • Creating the illusion of “scientific proof”: They will use vague phrases like “Scientific research shows,” or “Certified by XX authoritative institution,” leading consumers to believe that their product or philosophy is fully supported by science, when in reality, it might just be taken out of context or citing a controversial study.

Internalizing these questions and thought patterns requires continuous practice. At first, you may need to consciously remind yourself, but over time, these steps will gradually integrate into your information processing flow, allowing you to more acutely identify and resist linguistic manipulation.

The core reason why the vast majority of people fail is not because they don’t engage in production, nor is it because they never accumulate, but rather because they fail to accumulate for a sufficient period of time. Consequently, the amount of money is insufficient, and thus, they fail to acquire or master true wealth.

Life should be centered around production. Everything else, no matter what it is, must be ranked after it. Nothing is more important than production—at least, until basic necessities are met.

What Exactly Are the Means of Production?

• Time is the only means of production owned by the proletariat. Time is incompressible, time is uncrossable, and time is always indispensable.
• You must produce goods and services that can be sold. This means someone needs them, or even the entire society needs them, for someone to buy them. Otherwise, how good you feel your creation is is useless. If no one wants it, there is no exchange, and therefore, there is no money.

The Fundamental Reason for Life’s Hardship

To make money, you must produce, because the only legitimate source of wealth is production; conversely, if you don’t produce, you won’t earn money. Fundamentally speaking, the difference in people’s income primarily stems from their proximity to effective production. In other words, the closer you are to production, the more money you earn; or conversely, the farther you are from production, the less money you earn.

The Jobs People Dislike

In the past, apprentices mostly focused on the manufacturing process; but for today’s working professionals, the most profitable approach might be to choose the sales process—that is, working in the sales department.

The key here is that sales income has no upper limit. This is something that no other organized form of effective production can rival. The more developed society becomes, the larger the market gets, and the richer the variety of goods and services, the more essential sales become to the producers. Therefore, many sales positions have a “performance commission incentive mechanism”—how much you earn depends on your performance. Other positions, such as administration, accounting, and logistics, generally have fixed salaries. So, if you want to earn more, you should prioritize choosing sales.

Absurdly Selling the Means of Production

Time is our ultimate means of production. The tragic thing is that 99% of people rely on directly selling their time to earn income. For the vast majority of people, their personal business model throughout their lives is simply selling their time without any processing. Then, they desperately compete at this level, striving to have the highest unit price for their time—that’s all.

The Business Acumen Not Taught in School

Customer Lifetime Value refers to the profit you can earn from a single customer who purchases your goods or services throughout their entire life.

• The shorter the time cost, the harder it is to make money in a business.

For a restaurant, it is actually a quite good business for the average person, and the probability of success is quite high. However, from the perspective of time cost, this business is not the most profitable. It has a certain learning time cost, and while the daily production time cost is not high, it requires continuous production, and every sale incurs a certain time cost.

In comparison,

Creating a book is relatively much more profitable because, although the learning time cost is relatively high (research and preparation), there is also some production time cost (the writing process). But the sales time cost and the reproduction time cost are zero for the author.

Money is a Social Ledger

• From the essential nature of a social ledger, it can be seen that money is actually the debt of the entire society. It represents what the society owes you or the services it owes you. If you are very poor and lack money, it actually represents that you owe society a lot. You have made little contribution to society.

• Since money can store anything, money can naturally also be a form of means of production.

• Money is the means of production. Furthermore, it is also the most flexible form of storage.

• Money is the most flexible means of production.

Money Has Two Different Uses

• For most people, money has only one use: consumption.
• The second, and far more important, use of money is: investment.

The desire for investment grows from nothing and becomes increasingly strong. It automatically overwhelms the desire for consumption, to the point where, without realizing it, you naturally use more money for investment rather than consumption, unless it is a necessity.

Consumption is certainly joyful because desires are satisfied. But in reality, investment is also joyful; it is also a way of satisfying desires, and perhaps even more joyful.

Knowledge is like this, and useful knowledge is even more so. Once you learn it, you cannot forget it. Right now, it is difficult for you to waste money carelessly because you feel it should be used to produce something; it is difficult for you to hate the rich because you know the wealthy are creditors; it is difficult for you to ignore financial management because you know money is the storage of all things, and your freedom is stored there; it is difficult for you to be content with simply selling your time because you know that is the worst personal business model.

The Fundamental Principle of Producing with Money

The essence of investment is actually lending and receiving interest. Even the core of finance is merely interest; and the entire financial market is driven by and exists solely because of the rate of return.

• Money is actually a form of means of production.
• Interest is compensation for the opportunity cost of capital.

Just like time, capital is a scarce resource. This means that its use incurs an opportunity cost.

Regarding Borrowing Money

All money lent to relatives and friends is essentially given away; do not expect them to pay it back.

Those who know how to produce with money cannot just lend money out casually because their opportunity cost is relatively higher. If you think deeply, many people lend money to others not because they consider themselves generous or benevolent, but because of ignorance or incompetence. The opportunity cost of the money they hold is actually zero, so they don’t care much. Of course, this statement is harsh, but the logic is sound.

Equity is Essentially Equivalent to Debt

• From the company’s perspective, the company has borrowed money that never needs to be repaid.
• From the lender’s perspective, there are suddenly many benefits: higher returns and stronger liquidity.

The Fundamental Difference Between Investment and Speculation

In the stock market, all investors are traders, but not all traders are investors. Only a tiny minority of traders follow a long-term holding strategy, while the vast majority of traders engage in frequent trading. What is the difference? Only investors consider time to be a necessary component of the means of production, whereas the vast majority of traders—let’s call them “speculators”—do not have time in their means of production.

Time is the Only Path to Development.

Traders play completely different games in the same arena. Speculators participate in what I consider to be the worst kind of limited game, called a “zero-sum game”: the money earned is precisely the money lost by others. But investors are different; if they succeed, they earn the “result of development.” What they participate in is actually an “infinite game.”

The Mirror Effect of Investment Risk

I am too lazy to even look at financial reports because the best companies are the ones that are least profitable when they falsify their reports. I have a background in accounting, so it’s not that I can’t understand financial reports; I just feel that picking stocks by looking at reports is like trying to find gold in a pile of garbage. But the problem is, the gold mountain is standing right there, so why bother? The way ordinary people choose stocks is simple: first, try to choose the best goods in life. Then, not only buy the goods, but also buy the stock simultaneously.

The Actual Shape of Individual Time

Time is like a container, and inside it are all the people who have lived up to the present, and all the things they have done. Obviously, the size of each person’s time container is different.

Time, this container, has a start and an end, but between the start and the end, time is more like a pipeline than just a straight line. Some people do more things in a unit of time and are more efficient; therefore, this person’s time is different from others’ time—it has a larger diameter, a thicker pipeline. Some people do nothing meaningful for a long period of time; then, this person’s time during that period is merely a straight line.

What should we do to earn money? Produce, sell, invest. In any case, we absolutely cannot waste this ultimate means of production, time, on things that yield no output.

How to Do More Things

• After spending time to earn money, we must do more things.
• More precious than financial freedom is actually time freedom.

For those without production capacity, time is merely a ray—instantaneously having no area, long-term having no volume; time is not even a means of production. Therefore, time can only be “bored,” bored to the point of “waste,” and must reach the point of being “killed.” For those with production capacity, time is simply too beautiful; it can be used to create anything, do countless things, and even nurture kinship or love. Furthermore, as production efficiency increases, the possibilities of time become more numerous and greater. This is probably the most exciting reason why we are obsessed with learning and unwilling to spare any skill!

Factors Acting Against Production

If you are a producer, or even an effective producer, or even just someone aspiring to be a producer, you must know that there are things that are naturally “anti-production” and must absolutely be avoided. First are drugs and gambling. The ultimate victims of these two things are likely to start innocently, based on the naive idea of “just trying” or “just playing,” holding the hope that “it won’t happen again.” Little do they know, these two things should not even be touched.

Of course, more common than drugs and gambling is vanity. The definition of vanity can be very clear: money used for consumption was not earned through one’s own production, yet one is not ashamed of it but is proud of it.

Affluence Index = Own Production Income / Own Consumption Expenditure

• If a person’s Affluence Index = 1, they are neither poor nor rich;
• If the Affluence Index < 1, they are poor, and the smaller the index, the poorer they are;
• If the Affluence Index > 1, they are affluent, and the larger the index, the richer they are.

Many so-called wealthy people actually face the dilemma that their consumption expenditure is very high, while their production income is equal to 0, or even less than 0.

Some people genuinely earn money through effective production, yet they often fall back into poverty—as the old saying goes, “Seeing the high building, seeing the banquet, seeing the building collapse.” The core reason for falling back into poverty is always the same: the growth rate of consumption expenditure far exceeds the growth rate of production income.

To put it in my own words, never increase your consumption level too quickly.

In the more than 40 years since the Reform and Opening Up, a large number of so-called “middle class” people have appeared. But once the economy declines, the vast majority of them fall back into poverty overnight. What happened? It wasn’t that they didn’t earn money; their problem was that they earned money but couldn’t control their spending. Too many expenditures in life are not necessities but stem from desires from various angles. Desire has no end; if it is not properly controlled, it actually has the power to make anyone fall back into poverty, no matter how strong their production capacity is.

Wealth Gap is Inevitable

Every carriage requires at least 4 people to carry it; there must inevitably be poor people, and society needs poor people to function normally.

Basic Principles for Improving Efficiency

The act of learning actually includes at least four levels: learning, practicing, applying, and creating. Therefore, just learning without applying is a waste of time and is the fundamental reason why most people fail to learn. What you learn must be used; what you learn must be practiced. The process of practice is actually the only way to improve efficiency. Through massive iteration (not just repetition), continuous accumulation, and continuous improvement. Efficiency can never happen overnight, because efficiency is something that must be developed.

Unexpected things will happen in life, and you will encounter bad people and bad events, but these are all external factors. Their existence or appearance has already damaged my development; you must absolutely not let them further devour my ultimate means of production. After all, all my wealth, whether material or spiritual, comes from my time, or more accurately, from the volume of my time. What time do I have to waste? What reason do I have to waste it on them? At all times, focusing on improving efficiency is the main task.

Summary

• Wealth comes from production, and it comes from oneself;
• Time is the ultimate means of production;
• Money is the storage of all things;
• Money is the most flexible means of production.

In this increasingly better era, as long as you spend your time on self-study, production, sales, and investment, you can earn money, and there are still many things worth doing.

The Difference Between Working and Investing

Earning money by investing, rather than earning money by exchanging time, is the biggest difference between working and investing.

Average Investment Level: Seeking Relative Victory

In the field of investment, achieving absolute victory is not easy, but achieving relative victory is more realistic. Investors who achieve relative victory can become profitable, while those who achieve absolute victory may become masters. However, mastery is not achieved overnight, nor can everyone become a master. Therefore, for ordinary investors, becoming a relative victor should be the primary goal.

The Relationship Between Return on Investment and Time

“Investment” refers to putting personal money, time, or energy resources into something expected to yield profitable or satisfactory returns. The return demanded by an investor depends on how much investment risk they perceive. If an investment is extremely risky, investors usually expect a higher rate of return.

Time and Liquidity: Key Factors Affecting Returns

Risk factors include Time and Liquidity. The longer the time required for an investment, the higher its rate of return should be. The longer others occupy your capital, the greater the possibility of capital loss due to unforeseen accidents. As an investor, you hope this risk is compensated.

Furthermore, investors must consider the liquidity of the capital. Liquidity refers to the ease or difficulty of investing and withdrawing capital from an asset. When you urgently need money, can you quickly withdraw funds from the invested company? If so, the investment has high liquidity, or in other words, the asset is easily convertible to cash; conversely, it has low liquidity.

Applicability of Installment Payments

Due to the existence of uncertainties, installment payments may be a more suitable choice.

Xiao Chen is in love, but his income is meager, making it difficult to meet Zhenzhen’s material needs. It is his girlfriend’s 20th birthday, and he must give her a gift no matter what. He gathered some money, bought a gold ring, and wrote on the card:

“Dear Zhenzhen, Happy Birthday! And I wish you happiness for all the holidays from today until we get married!”

Stock Market Bottom Fishing: Caution in High-Risk Operations

An old friend was rushing to catch a boat, driving as fast as possible to the dock. When he arrived, he found the boat had already left the shore. He locked his car, immediately jumped onto the boat at a sprinting pace, completing the action in one go without any pause. His action startled everyone on the boat, and the captain wondered, “Sir… the boat hasn’t even docked yet…”

Bottom Fishing refers to the strategy of buying when the stock price has fallen to its lowest point, especially after a sharp decline in a short period, anticipating that the price will quickly rebound. Buying the cheapest stock is the opportunity that all investors aspire to, and it is the profitable model adhered to by value investors. However, there is no clear standard for what constitutes the “cheapest” or “bottom” price. Bottom fishing is often a description of buying at an already occurred low point, but it is difficult to judge what future point will be the true bottom. Furthermore, sometimes a stock price drops rapidly not because it is undervalued, but because the company’s fundamentals genuinely have problems. If you buy at this time, the stock price may not rebound quickly; instead, it may fall further due to unclear fundamentals.

Investment master Peter Lynch once said, “Don’t bottom fish.” This means that if an investor is certain that the company’s fundamentals are not seriously flawed, and the stock price has fallen below reasonable valuation levels, they can consider buying without trying to predict the bottom.

Moral Hazard: The Hidden Danger of Selfish Behavior

Moral Hazard is not synonymous with moral depravity; rather, it refers to actions taken by individuals engaged in economic activities that maximize their own utility while being detrimental to others. Alternatively, it can be said that when one party in a contract does not fully bear the consequences of the risk, they will take selfish actions to maximize their own utility. This concept was proposed by Western economists in the 1980s and belongs to the field of economic philosophy.

Moral Hazard manifests in various forms, the most common of which are the following two:

1. Deliberately Causing Insurance Accidents For example, deliberately causing cargo loss or personal injury to defraud the insurance company. This behavior is increasingly prevalent in our country, especially in life insurance, where cases have occurred of insuring a person and then killing the insured to claim the insurance money, posing a threat to social stability.

2. Deliberately Exaggerating the Degree of Loss When an insurance accident occurs, the insured person should immediately notify the insurer and take measures to mitigate the loss. However, some people, in order to claim more insurance money, do not do their best to mitigate the loss but deliberately exaggerate it. For example, after a ship strikes a reef, the shipowner bribes the captain to deliberately steer the ship toward the reef, causing severe grounding, which makes it easier to commit fraud.

Productivity Advantage in Competition

Whoever has higher productivity is the one who can win in competition. As the saying goes: “I can fight with a broom handle, the problem is the Northern guys don’t!”

Monetary Properties of BTC

Money is a specific commodity that serves as a general medium of exchange, possessing functions such as a means of circulation, a means of payment, and a means of store of value. It satisfies the needs of commodity production and exchange, as well as the need to hold wealth in monetary form.

Don’t Drink the Milk a Miser Offers You

There is no free lunch in the world. When faced with a sudden windfall, one must remain clear-headed and resist the temptation to take advantage, even in the face of huge economic benefits.

Supply and Demand are Mutually Causal

If there are no good men in the dance hall, will there be good women in the dance hall?

Say’s Law: Supply Creates Demand

Say’s Law, also known as the Market Law, states that under normal circumstances, a supply in the market will generate demand for it. Brodeur explains that any product supplied in the market drives the distribution of money during its production process—for instance, purchasing raw materials, paying transportation fees, and distributing wages. This distributed money will eventually reappear in the form of demand, thus forming a cycle between supply and demand.

Keynesianism: Demand Creates Supply

The British economist Keynes proposed a view diametrically opposed to Say’s Law in the 1930s: that demand can create its own supply. He believed that the free market cannot guarantee stable economic growth and full employment, and therefore, state intervention must be strengthened. When demand is insufficient, the government should take measures to stimulate demand, thereby driving economic growth and achieving the goals of full employment and increased supply. This view is known as the Keynesian Law.

Customer Value Gain: The Difference Between Total Value and Total Cost

Customer Value Gain refers to the difference between the customer’s total value and the customer’s total cost. The customer’s total value includes product value, service value, human capital value, and image value, etc.; the customer’s total cost covers monetary, time, energy, and mental costs. One way to increase the Customer Value Gain is to increase the total value purchased by the customer.

Consumption Imitation Effect: The Influence of Others

Our consumption expenditure is often influenced by those around us. For example, a young man might not wear the same clothes as his grandfather, but he will wear the same clothes, carry the same sling bag, and have the same hairstyle as his classmates or colleagues. This is the consumption imitation effect.

Snob Effect: The Charm of Scarcity and Expense

The Snob Effect refers to consumers preferring goods that only a few people can enjoy or that are unique. The fewer people who own a certain snobby good, the greater the demand for that good. Art masterpieces, specially designed sports cars, and custom-made clothing are typical snobby goods. The value consumers derive from them often stems from the privilege, status, and sense of honor that comes from the fact that “almost no one else owns the same thing as me.”

Poor Quality Assets: Worse than Having Nothing

Worse than having nothing is an asset that may bring losses at any time. Taking a car as an example, suppose someone gives you a BMW, and the other party pays the down payment; you only need to repay the mortgage monthly. However, you face not only the pressure of high repayments but also extra expenses such as fuel, maintenance, and upkeep. If you sell the car at this time, the price has often already fallen, and the proceeds are insufficient to repay the loan.

Currently, real estate is also trending toward becoming a poor quality asset. Negative assets mean not only having nothing but also owing a large debt to the bank. For example, if someone buys a house with a market price of 1.5 million RMB, and the current market price has fallen to 900,000 RMB, but the mortgage and interest they owe amount to 1 million RMB, their negative asset ratio is 10%.

Structural Unemployment: The Dilemma of Mismatched Supply and Demand

An older unmarried man encounters an older unmarried woman in the park and proposes a couplet: “Possessing a body of strength, but having no land to cultivate.” The woman immediately responds with the counter-couplet: “Wasting three feet of good land, yet no one comes to cultivate it.” This is a vivid depiction of structural unemployment: mismatched supply and demand leading to idle resources.

This phenomenon is known in economics as the “Marginal Productivity Theory.” It posits that there is a relationship between the wage level and the marginal output of labor (which is the increase in output generated by adding one unit of labor). When a profession’s wage is higher than its marginal output, it attracts more people to join, thereby increasing the labor supply, which in turn lowers the wage level until marginal output and the wage level reach equilibrium.

This phenomenon is prevalent in many professions and industries. When supply and demand in the market tend toward equilibrium, the wage level usually tends toward the value of the marginal output—this is the situation where profit approaches zero. In the long run, the market forms a relatively stable equilibrium state, and the wage level adjusts to match the skills, labor output, and market demand.

This also explains why continuous learning and skill improvement are extremely important for individuals to achieve success and obtain better compensation in the workplace. By constantly improving their skills and knowledge, individuals can maintain competitiveness in a fierce market and achieve better economic returns.

If you wish to earn profit beyond the inherent value of the labor itself in the labor market, you can consider the following strategies:

Differentiation and Specialization: Find the field or specific skill you excel in, and continuously refine it to become an expert. Through differentiation and specialization, you can provide higher quality and more specialized services, thereby creating higher market value for yourself.

Creating Unique Value: Identify pain points or needs in the market and provide unique solutions. Understand the customer’s true needs and offer services that exceed their expectations. This can win you more customers and positive word-of-mouth, leading to profit beyond the inherent value of the labor.

Building a Personal Brand: Establish your visibility and authority in the industry through effective branding and self-promotion. A reputable and credible personal brand can bring you more business opportunities and chances, potentially leading to higher returns.

Mastering Hybrid Skills: Learning and mastering skills across multiple domains allows you to become a versatile individual. Possessing multiple skills increases your flexibility and adaptability, better meeting market demands, which brings you more opportunities and potential profits.

Innovation and Leadership: Continuously innovating and leading teams to achieve goals can bring you more business opportunities and project collaborations, thereby creating extra profit for you.

It is important to emphasize that pursuing profit beyond the inherent value of labor is not easy; it requires a significant investment of time, effort, and resources. Furthermore, success is not achieved overnight; it requires continuous effort and ongoing learning and growth. The key is to find the development path and strategy that suits you and continuously optimize and adjust it through practice. In a fiercely competitive market, only by continuously enhancing your value can you gain more opportunities and profits in the workplace.

Simply put, Producer Surplus is the net gain for the producer in a transaction. Its calculation involves two key factors:

Producer’s Supply Price: This refers to the price at which the producer is willing to sell the goods or services. Typically, the producer’s supply price is related to their marginal cost (the extra cost of producing one unit of goods), because they hope to at least cover the production cost.

Market Price: This refers to the price the buyer is willing to pay, which is the market price of the goods or services.

The formula for calculating Producer Surplus is as follows:

Producer Surplus = Producer’s Supply Price - Market Price

Producer Surplus represents the net gain obtained by the producer when selling goods at a lower supply price. Producer Surplus occurs when the market price is higher than the producer’s supply price, because the producer sells the goods at a lower price but receives a higher actual income. If the market price is lower than the producer’s supply price, the Producer Surplus will be negative, meaning the producer may incur a loss in the transaction.

Producer Surplus is very important for understanding market operations and the supply-demand relationship. In a free market, the balance of supply and demand determines the market price, and Producer Surplus helps us understand the producer’s profitability at different price levels. When the market is in equilibrium, Producer Surplus reaches its maximum, meaning the producer achieves maximum profit.

Okay, Consumer Surplus is an economic term that refers to the economic benefit or value obtained by consumers when purchasing goods or services. Its calculation method is:

Consumer Surplus = Consumer’s Reservation Price (Expected Price) - Actual Price Paid

For a simple example, assume the reservation price for an item is 100 Yuan for the consumer. If the actual market price is 80 Yuan, then the Consumer Surplus obtained by that consumer is 100 - 80 = 20 Yuan.

Consumer Surplus reflects the net gain obtained by the consumer after purchasing goods or services. The larger the Consumer Surplus, the higher the economic utility obtained by the consumer. Increasing Consumer Surplus can usually raise total social welfare. Governments take many measures to increase Consumer Surplus, such as subsidies, tax incentives, etc.

The 40:40:20 Principle Guarantees Financial Safety To achieve financial security, you must change the allocation ratio of your money. Although the majority of the money must still be placed in low-risk investments, you can allocate 40% to moderately risky investments. If you hold this money long-term, the risk will be greatly reduced through the effect of “average cost return” (or “average cost averaging”). The remaining 20% can be invested in high-risk projects, which involves speculative funds such as emerging market funds or national funds, as well as all special funds and equity funds. The risk of these funds can also be reduced over time through the effect of “average cost return.” On the other hand, your probability of profit is extremely high. One crucial point is: you absolutely must not invest the money intended to guarantee your financial safety into high-risk or speculative projects. You must not touch this money. The investments you make must guarantee that your financial safety will never be compromised.

Financial freedom is a goal that anyone today can achieve, of course, provided we have the courage to pursue the life we truly desire. As a famous saying goes: “It is not the difficulty that makes us give up, but rather that we give up, which makes it seem so difficult.”

If we keep the laws of money in mind, we will find that our financial situation is steadily improving. Nothing can stop a mindset that aligns with the times. This applies to everyone’s life. Nothing can prevent us from enjoying the right we are born with—prosperity. A life of dignity and financial ease aligns with our natural laws. As long as we don’t give up, nothing can prevent us from reaching this goal.

Making a Dream Album

To achieve financial freedom, we must have motivation. Therefore, the first thing we must do is come up with 10 reasons (wishes) why we want to become wealthy, and write them down. This will be the driving force for our actions.

Next, from these 10 reasons for wanting to become wealthy, select the top 3. Don’t set yourself too many goals, as that might be unrealistic. Human desires are endless, and we need to distinguish between primary and secondary goals—to clarify which ones are the most important. Once the goals are set, we must find ways to achieve them.

One method taught by Money to Jia is to use a Dream Album and a Dream Piggy Bank: the Dream Album is used to collect photos related to your wishes, which are then pasted into the album.

Looking at the Album Every Day

The act of thinking through pictures and imagining the scenarios where you achieve your wishes is called “visualization.”

Preparing a Dream Piggy Bank

Prepare a separate piggy bank for each dream, and write your dream on it. Once the piggy banks are ready, put every penny you save into them.

When Jia doubted whether the Dream Album would be effective, Money said: “Curiosity is good, but it must never hinder your actions. Too many people hesitate in their actions simply because they feel they haven’t fully understood the matter. Putting it into practice is far more useful than pure thinking.”

When we question whether this visualization is just a “pipe dream,” we need to know that “successful people are successful because they always dream of the day they succeed, constantly imagining the circumstances when they have achieved their dreams. Of course, people cannot remain stuck in the dream.”

“Learning is the process of recognizing new concepts and new ideas. If people always consider problems using the same way of thinking, they will always get the same results. Don’t jump to conclusions before you have tried it.”

“People without imagination find it difficult to achieve great things. The more energy we put into something, the greater the possibility of success. But most people put their energy into things they don’t like, instead of imagining what they hope to gain.”

Don’t adopt a mindset of ’let’s just try it’; take concrete action! If you only adopt a ’let’s just try it’ mindset, you will end up in failure, and we will achieve nothing. ‘Trying’ is merely an excuse; we have not done it, yet we have already prepared an escape route for ourselves. There is no option to ’test’; there are only two choices—to do it or not to do it."

Success Journal

When we do something, we need sufficient self-confidence. Our level of confidence determines whether we believe in our ability and whether we believe in ourselves. If we fundamentally don’t believe we can do it, we won’t even start, and if we don’t start, we will gain nothing.

Therefore, we need to keep a “Success Journal.” The “Success Journal” is similar to a diary; you record all the things you have successfully done in it. Write down at least 5 personal achievements every day, no matter how small. The main purpose of doing this is to help us boost our self-confidence.

At first, we might find it difficult, and we might ask ourselves, “Does this or that really count as an achievement?” In this case, our answer should be affirmative. Being overly confident is much better than being insufficiently confident.

When we encounter problems:

a. Still stick to your idea. Everyone can do this when things are normal. It is only when real difficulties arise that the truth is revealed. Only a few people can firmly implement their plans without wavering. The very successful people even have the ability to perform exceptionally when things are at their hardest.

b. When things are progressing smoothly. Even when everything is going very smoothly, you must firmly and unwaveringly implement your plan.

c. The 72-Hour Rule. When we decide to do something, we must complete it within 72 hours, otherwise, we are likely to never do it again.

“How much money a person earns is linked to their self-confidence. Furthermore, whether their experiences are focused within their scope of ability or placed beyond their reach is also very important. Without a Success Journal, we won’t think about in which areas we are suited to earn money.”

Often, our inability to act stems from a psychological fear. Fear always appears when we imagine how things might go wrong. The more we think about the possibility of failure, the more afraid we become. But when we look at our Success Journal, we notice the successful things, and naturally, we think about how to do them."

Earning and Saving Money

When Money encouraged Jia to bravely earn money, he told the story of a young boy named Darryl. Darryl became a millionaire at the age of 17 through personal effort, making him a role model for Jia.

In Darryl’s story, a businessman gave Darryl (Jia’s role model) advice on how to earn money:

1. Figure out what you like, and then figure out how to earn money from it.
2. Solve a problem for others, and you will earn a lot of money.
3. Focus your energy on what you know, what you can do, and what you possess.
4. Before buying something, ask yourself, “Is this really necessary?”

Mr. Jin, when guiding Jia not to spend all the money she had immediately, told the story of a goose that lays golden eggs:

A goose raised by a farmer laid a golden egg every day. The farmer was very greedy and hoped the goose would lay at least two golden eggs every day. In a fit of pique, he killed the goose, and from then on, he never received another golden egg. The goose is the principal (the capital), and the golden egg is the interest (the return). The farmer’s biggest mistake was “killing” his “goose.”

Expenditure and income are directly proportional; the higher the income, the higher the expenditure, unless you learn to allocate your assets reasonably and learn to manage your spending according to your income.

Advice for Those in Debt

a. Destroy all credit cards. Spending money using a credit card costs more than spending cash.

b. Pay the minimum installment amount within the allowed limit. The higher the installment amount, the less living money you have left each month. Often, people underestimate how high their living expenses are, and they might take out new loans to pay off old ones when a major expense occurs.

c. For consumer loans. For loans related to daily goods (like TV loans) other than housing, it is best not to apply for them initially. If you must apply, save half of the money remaining after deducting living expenses, and use the other half to pay the consumer loan.

Fund Allocation

The author suggests that we can divide our income into Daily Expenses (10%) + Dream Goals (40%) + Golden Goose Account (50%). This means we can save 50% of our income, and this money should not be easily touched. It is like the goose mentioned earlier, which lays golden eggs, allowing money to generate more money.

Of the remaining 50%, besides the 10% needed for daily life, the remaining 40% is saved to achieve the dreams we want, such as buying a phone as a reward or going on a trip, etc. This amount is up to you to manage and plan; remember to allocate it reasonably.

Golden Goose: From the story of the golden egg, the “Goose” refers to the money (the savings value), and the “Golden Egg” refers to the interest (the return).

Never kill your goose, and don’t use all your money to pay off loans, leaving you with nothing. Having nothing is not our goal; our goal is to achieve the initial 3 wishes or accumulate the savings.

Passive Income

Investment Notes:

1. Invest money in safe places.
2. The money should lay many “golden eggs” (choose high interest rates, with the highest dividends coming from stocks).
3. Investment should be simple and clear, easy to operate.

The 72 Rule:

Divide 72 by the annual profit percentage of the investment, and the resulting number is the number of years required for that money to double.

Divide 72 by a certain inflation rate, and you can find out how many years it will take for the money to halve in value.

When the market declines, losses only occur when you actually sell the fund.

A fund has a metric—the fluctuation rate (or volatility): a low fluctuation rate means high safety and more stable profit growth. Funds generally last 5 to 10 years. Since the market always has ups and downs, but the overall trend is upward, you can check the market after 5 or 10 years.

72 / Rate of Return = Time to Double 72 / Inflation Rate = Time to Halve (Depreciation) 115 Rule: 115 / Rate of Return = Time to Double (Twice)