Today, the long-term interest rate on a billion dollars is about 1%. Think of what you could do with a billion dollars. You could build huge buildings. Or set up lots of factories. Or start your own airline… or almost anything else.

That 1% interest rate, however, means the best you could do with your billion dollars is something that makes about ten million per year. All those big buildings would only deliver $10 million in rent payments. All the goods from those factories would only sell for $10 million. And so on. (Per year, on average, after expenses, after taxes, risk-adjusted, etc.)

The idea of a shortage of money is silly. There are giant piles of money sloshing around, all over the world. Desperate for somewhere to go, something to do. But why is it so hard to use a billion dollars? Most people probably think, “Hey, you know, I could really use a billion dollars to do awesome thing X. Why don’t they just give it to me?”

Here’s why. Suppose you’re a billionaire. You want to (for example) use your billion to start small businesses. You post ads for hopeful entrepreneurs. A few come, you talk to them, and you give them a few million in loans to get started. And then they take the money, and disappear to Latvia. Oops.

Next time, you won’t be so dumb. You hire Bob to select people to lend to – you want to filter out the thieves. Bob finds a few people, and gives them a few million in loans. Except Bob told all his friends to apply, and then only selected his friends. And Bob and his friends disappear to Latvia. Oops.

Next time, you won’t be so dumb. You set up a foundation, with a board of directors and everything, and give them a few million to make loans with. Except Joe, one of the five directors you hired, is a really charismatic guy, and he convinces two of the others to quit, replaces them with yes-men, and they vote out the remaining two. And, you know, a nonprofit needs accounting, and it needs lawyers and paper and some other things. And it just so happens that Joe’s friends run accounting and legal and office supply firms. And Joe buys all his stuff from them (at ten times market prices) … and it turns out, at year’s end, the foundation doesn’t have any money to make loans. So you double the budget. And, what do you know, Joe needs twice as much paper the next year. And then you give up. Oops.

Next time, you won’t be so dumb. You hire a team of psychologists to write an honesty test. You hire finance PhDs to make a finance test. If someone wants a loan, you test them on marketing and sales, on accounting and management, on design and engineering – on every topic that might be relevant to small businesses. You won’t get tricked this time! Except the only people who pass the tests are competitive conformists, whose main goal is to be first in every contest. And they sit on the money, and spend all their time sucking up to reporters, trying to win the Best New Business Of The Year award. Oops. This is why the problem is hard. (See Negative and Positive Selection.)

There is, always and everywhere, no shortage of money. There is a shortage of human capital: people who know how to do stuff. There is a shortage of social capital: people who know each other, trust each other, work well together, and won’t run off to Latvia with stolen funds. And there is a shortage of places to put money that provably have enough human capital and social capital to not immediately steal it, or waste it, or use it to fund some project any physics undergrad could see was impossible. These are the vital, scarce ingredients for getting anything done.

If you have a big project you want to execute on – don’t think about “ways to get money”. Think about ways to get human and social capital, and prove you have them. Thinking of money as scarce is the wrong reference frame.