Economics always seems very complex, and there is a reason for that. Like all mathematically impossible situations the only way to explain them is to make them seem too complex to explain.
Through all of human history the idea of exchange goods for services has required all the systems we see today, including, laws, education systems, policing, security etc.
Until a few decades ago the idea was that you would exchange services for things of equal value, such as a lump of gold or silvers or a bushel of corn. And to save carrying huge bags of gold around, notes were passed between people saying that they promised to provide the actual gold in exchange for a service. These notes of promise were called money. And to be able to make money you used to have to have a store of precious metals equal to the amount of money you printed.
And then someone has the really smart idea of getting rid of the need to actually have the store of gold to be able to print money. This allowed as much money to be made as was needed, to grow the economy. The only issue is that if anyone ever wanted to swap his or her money for gold the whole system would collapse.
So to make sure a collapse doesn’t happen there was an implicit need to make sure all the money keeps moving around. It’s like musical chairs where there are less chairs than people, so as long as everyone is moving there is no issue, but if the music was ever to stop there wouldn’t be enough places for all the money to sit, then the value of money goes down (inflation).
To make sure the money keeps moving governments used to tax money that was sitting still. This has two important effects:
1. Taxing money means it keeps moving by itself (moving to the government who could spend it on services)
2. Made it preferential for people to keep their money moving to keep it out of the hands of the taxman.
Today we have a huge issue in that the amount of tax applied to money that is not doing anything is too low to encourage people to keep it moving. This means that too much money is just sitting in banks making money without doing anything, and this is really bad, as sitting money can be seen for what it is, and that is a promise that can never be kept.
It’s okay to be rich; actually it’s the best thing to be. But the value of money will only get less if it does nothing of real value. Capitalism is without a doubt the best system the human race has ever had to build the quality and length of human life. But capitalism demands that capital be used to build stuff, it fails if it sits around doing nothing.
Tax lazy money to keep the capitalist system healthy. Either it moves to the government to spend, keeping it moving. Or it forces people to use their money to build things. Either way is much better than notes of promises that cannot be kept sitting in places where its lack of true value can be seen.