Having wealth is possessing things that have longstanding value and that allow you to get food and so survive. Having cash flow is possessing an ongoing supply of a medium of exchange that allows you to get food and so survive. Wealth (land, homestead, livestock, precious gems, gold, etc) is hard to come by and harder to keep, but it can better provide for you and your family for a lifetime. Cash flow (money and credit) is relatively easier to come by, but by its nature as a "flow" it can be quickly and suddenly lost. At this time, cash flow is growing in precariousness.
Cash flow can look like wealth because as long as it's "flowing" it can buy much of the same stuff that wealth can buy. It is a pretense that is so common in Western civilization, especially the US, that many people don't see the difference. They believe they are rich because they have a high credit score and so they buy big houses that are impossible to heat and cool, and drive to far away workplaces in big vehicles that are very expensive to maintain.
I'm thinking of all this because Donna and I filed our income tax returns this week. The bottom line is that we had to pay a lot to the Federal and State authorities. I've had to pay before, but not this much. Having two kids in college on scholarships and loans didn't help, buying a house didn't help, making charitable contributions didn't help, even incurring business losses didn't help. When I say "they didn't help" I mean that even though we received some tax benefit from them, they weren't enough to substantially reduce our tax bill, though they have in the past. The difference appears to be that our combined cash flows pushed us a few hundred dollars over a limit that pretty much invalidates the benefits of exemptions and deductions.
Now I'm sure a lot of smart, well-meaning people would tell me that we're simply not handling our finances well enough. We need to invest in retirement accounts or put our money in a sheltered portfolio or buy bonds or something. Well, I did experiment with a "what if" where we both paid the maximum into IRAs and it had zero effect on our tax liability. Such games don't work when you have no wealth. The tax laws are written by and for the 1% and to the detriment of everyone else.
This is symptomatic of wealth being concentrated way at the top of the pyramid. The elites rig the system to move wealth from the bottom, up to them. Their game is more exposed these days because there is less total wealth to cover its movement upward (which is ultimately, theft). I think also that the growing scarcity of resources (from depletion and from population pressures) is prompting the elites to increase their pace of sucking up the world's wealth and of hoarding it in an endgame designed to leave them with everything and us with nothing.
In reviewing our 2012 taxes, it looks to me like the only thing that would have helped would have been a reduction in our total income. Eventually, that will happen and I have no problem with living much simpler and with less stuff. Our recent house purchase is actually a reduction in the complexity of our lives from when we had the "McMansion" a few years ago--the mortgage payment is smaller and it's more energy efficient, though it's still in the heart of suburban sprawl. But we maintain our complex lifestyle (i.e., cash flow) as much as we do, for the sake of trying to provide our sons with a decent start in life, including a "good" education. In this effort, though, we are fighting a tide of austerity being pushed down from the elites via Neoliberal (aka, Neoconservative) legislation based on their ideology.
So I'm willing to cut the cash flow and live simpler. If my sons were graduated and self-sufficient, if I could write novels and sell them, sacrificing the day job would be a no-brainer. I could then concentrate on accumulating real wealth--a stimulating occupation, enough food and shelter, the ability to decide every day's plan, health, my wife, a loving family and friends.
The cash flow I have can buy only a small portion of these things. I would rather have wealth.