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?
essays
A Rising Sun
by Jay Winik
April 30, 2018
Jay Winik is a writer and one of the nations leading historians. He is currently the Historian In Residence at the Council on Foreign Relations.
In looking at the military today, we inevitably are drawn to history for context. To be sure, we live in uncertain, chaotic, and dangerous times. Abroad we have the looming specter of an increasingly belligerent Russia; of rogue regimes racing to develop a nuclear weapon, North Korea and Iran; we have the heart-wrenching sight of innocents dying a ghastly death from nerve gas in Syria. At home, we have a populist and controversial president, the two parties at each other's throats, and the fear by some that democracy itself is under assault, if not withering away or dying. We also have a government that at times appears paralyzed. And there is the axiom that a government stretched at home, will invariably have difficulty supporting the military abroad. On its face, this does not bode well.
Is America up to this challenge? Are the danger signs all around, not just for the military but the American people as a whole?
America has weathered daunting crises before. It has survived strong presidents and bad ones, tough times and good ones. It has survived the Shays rebellion, the French Revolution, and the burning of the US capitol; a great civil war that tore us asunder, taking some 620,000 lives, an incalculable number. It survived World War I and World War II, Hitler, Nazi-ism and the Third Reich; and the Great Depression. It survived the tumult of the Korean War and agony of Vietnam and racial strife; and too, 9/11 and the seeming quagmire of Iraq.
Throughout, America has flourished. It's a remarkable story. Democracy has been strong, and democracy has prevailed. In a sense, however, it has never been easy. Think of George Washington as commander-in-chief at the beginning of the Republic. Confronted with the French military juggernaut that threatened to turn its might on America, Washington could feel himself aging day-by-day, that is, when he wasn't angrily swearing up a storm in cabinet meetings. Consider Abraham Lincoln during the Battle of the Wilderness, months after the great turning point of the war at Gettysburg. His hands clasped behind his back, his head bowed, with boxer’s circles lining his eyes, he roamed the halls of the White House muttering over and over to himself, "I must have relief from this anxiety or it will kill me." It almost did. The Union lost some 52,000 soldiers in a mere six weeks during the Wilderness campaign, nearly as many as America lost during the entirety of the Vietnam War. Or consider Franklin Roosevelt who as commander-in-chief was so genial, so confident and composed, always stoical. Yet when called upon to take the phone in the second floor Oval Office when he was given an update on the beginning of the North Africa invasion, a prelude to D-Day, his hand was shaking he was so anxious. Nonetheless, General Marshall would later tell him, "the light of battle is in our troop’s eyes.”
With American military men and women fighting abroad for our safety, we feel democracy is safe.
Is it?
One is reminded here, of what Benjamin Franklin said at the close of the Constitutional Convention. He pointed to the President's chair, and wryly remarked, "I have often in the course of the session looked at the sun behind the president without being able to tell whether it was rising or setting. But now I have the happiness to know it is a rising and not a setting sun."