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September: Debt
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23rd

interviews

The Cost of Care

by Sara Collins
22nd
21st

interviews

In Conversation with Rep. Al Lawson

by Representative Al Lawson
20th

interviews

From Cradle to Grave

by Deborah Thorne

interviews

The Collectors

by Craig Antico
19th
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10th

interviews

The Debt We Still Owe

by William "Sandy" Darity
9th
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5th

interviews

Necessary Debt

by Fred Selinger
3rd
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2nd

interviews

Buy Now, Pay Later

by Martha Olney
1st

essays

Reflections on Money

by Kianga Daverington

news

A Note From the Editors

by franknews
© Frank

essays

Reflections on Money

by Kianga Daverington
September 1, 2020

This essay, written by Kianga Daverington of Daverington PLLC , was originally published in January 2020.  The piece as been condensed for clarity. 

Money is not a physical object like a coin, a bar of gold or a dollar bill. Money is at its core, a technology. It is a human invention designed to solve a specific set of human problems. Consider money, perhaps, in a new way. Think of money as a system for capturing time.

Time is the one thing we each have that is absolutely finite. We are born, we die, and the dash in between is all the time we have. 

Think of production. We can usually produce more of some good by adding people to a task (also known as “WORK”). But we are still constrained by time. Whatever we produce is still limited by the amount of humans that can be organized to go into that production. Each of us possesses a limited amount of time available to us individually, so we need to convince or coerce others to add their time to ours if we want to achieve more than we can alone. 

Out of this imperative, nations are born.

The most important quality of any particular form of money is how well it preserves the value of time over time. Can you buy the same amount of stuff or more in the future than you can buy today? If yes, congratulations - your money is accumulating time for you and future generations while you relax on the beach. If it takes more and more of a unit of money to buy the same amount of time in the future, well then I’m sorry, but that unit of money is getting weaker and weaker. It’s losing value or said another way – it’s losing purchasing power. The longer you hold it, the less it buys. 

In a way, by purchasing goods and services, you are purchasing time. Every product and every service requires time to make and time to deliver - your time and/or someone else’s. The price therefore reflects the collective value of all the time put in. Money is a way we exchange time and move it around from where it is valued less to where it is valued more. 

This is where prosperity comes from. It comes out of how well a society, collectively and each person, spends its time. How much time is spent creating and making? How much time is spent consuming? If we make more than we consume, we have something left over called wealth. If we consume more than we make, we are left with debt. You can’t consume what you don’t have, unless someone extends credit. Where does this “credit” come from? Basically –it’s made up. 

Too much credit or debt eventually collapses and everyone is mixed up in the collapse. 

If we understand that a unit of money represents a unit of time, and we understand time is limited, then a unit in a system of money with unlimited supply cannot have any value. This is the problem we are facing today with the world’s money supply. The supply of money in the world is increasing exponentially as central banks create money by giving loans to national governments, which is where our money comes from.

Our entire world financial system is a powder keg of debt.

National currencies today are known as fiat money, a currency without intrinsic value that has been given its power to be used as money by a government that says it is money by regulation. Wikipedia says, “Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.” Well said, Wiki.

A government’s job of maintaining the value of its national money boils down to a confidence game. On what basis do the people who use that government’s money believe it has value? 

What happens to the money and those who hold it when the foundation of that belief begins to crumble?