From time to time, John Chow will reference the “Gun and Butter Theory” in one of his blog posts. I do not know if this theory is of his own creation or if he found it somewhere, but I do know that it makes pretty good sense.

The basis of the theory is that we can buy two things with our money: guns or butter. The difference between the two is that guns appreciate while butter depreciates. The conclusion from this then is that we should all focus on acquiring guns, because guns make more guns, while butter just melts.

I really like this theory and think everyone should consider it every time that they make a purchase. The best guns make you money without you having to part with them and the second best go up in value so that when you get rid of them you have more than you did before you got them. Everything else (almost everything that a person owns) would fall under the category of butter. Everyone’s goal should be to have lots and lots of guns. Eventually, once you get enough guns, you can have all the butter you want.