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We say berachot from opening our eyes in the morning until closing them at night, on everything nourishing that we eat, every drop of water we drink, fragrant smells, rainbows, thunder, as well as on most of the mitzvot that we do.
Through berachot, we acknowledge and thank God as the source of all the good we have, thereby fulfilling the words of Proverbs: "In all your ways you shall know Him" (3:8). The rabbis say that to take any physical enjoyment from the world without thanking God through a berachah is tantamount to theft.
Berachah is translated as "blessing," though that doesn't get us very far towards understanding its meaning. (According to the OED, "blessing" is derived from the Old English word meaning "to consecrate in blood.") The dictionaries indicate that berachah is related to the word meaning "to select," or "point out."
Rabbi Aryeh Kaplan, the 20th-century American teacher, suggests that berachah is related to "beraichah," meaning "spring" or "pool." A berachah acknowledges God as the ever-flowing fount and source of everything. The medieval Sefer Hachinuch translates "baruch ata" not as "blessed are You," but as "You are the source of all blessing."
The mystics teach that acknowledging God as the source of all blessing increases the flow of berachah into the world. When we give a berachah to someone else (for example, to our children on Friday night) we are not doing magic; rather we are opening ourselves to be channels for the influx of berachah.