How Money Works: Part 2 – Captain Obvious, Time Is Money

Money and Its Causality

Picking up from Part 1 – The Evolution of Flow Value, our society is in the highway to inflation. This state of inflation is indirectly caused by our practice to maintain and grow our potential buying power (credit ability) which is by saving our “hard-earned” money. Too bad this act of saving in the long run reduces the available effective flow-value in the market because population keeps growing. Imagine a drain pipe that’s stuck, we need to either increase the pressure or clean the drain. Feeding “new money” is one way of increasing the pressure that goes down but this will decrease the flow-value of currency due to too much effective value of currency in the market. The other way is to play with the interest rate of credit but this is unable to be practised as an individual will not have the capacity to influence interest rate decided by the conclusive monetary institution (FED, ECB, etc) so we will not go deeper into this, let the economist figure this out.

We have come a long way from barter to electronic money to credit.. But now it seems credit ruined it all in the sense of equality. Credit makes it possible for the bigger valuable person -rich- to get richer and the poor to get poor-er. The rule of thumb for us so far:

The more you work, the more you have buying power. The more you buy, the more economy grows. The more economy grow, the more civilization get to the next level. (which means you may need more buying power to maintain your stature) ….or not. The more you save, the more inflation you will see in market. The more inflation means your buying power will worth less. The more your buying power decreased, the less you can fulfil of your needs.

Either way we are screwed.

Cutting it simple and short, it is simple to say: What we need more as an individual is buying power. There are only two ways to increase buying power, one is to increase income, two is to increase value of income.

Before we dive into the practical way to increase our income/increase the value of our income, we have to realize in society practically we are not only talking about money as currency. Money effects essential things to contribution as a social element such as skill set (education), interpersonal relationships (you won’t marry a poor girl just because love), also the answers for the big questions in life (fulfilled basic needs makes you secure to think and have time to do what matters for you). This makes money essential to our civilization, but we are forgetting another currency. This particular currency has never been so explicitly expressed from the productive work we as human race did for the past 70 years.

The next currency we are looking at is time. So far time has not been accounted into the money we are discussing. Time, however, just become a commodity since the industrial revolution where there are constant working machines which bring the need to have a constant supervision. This somehow crept into the society as a productivity rate kept increasing and reached the peak in the founding of the Just In Time (JIT) and Lean manufacturing system. JIT and Lean manufacturing born from the system where a resource is worth the time it spend on certain job. Now.. Hasn’t this gone the other way around..? The divergence then creates what’s named as a craftsmanship and the manufactured mass-production products. But this is where it is interesting.

The target of the designed consumerism is those who are in the working class, because when one is working, one has the buying power through what is called “credit history”. Right now we can say it is impossible for a worker to not get paid by the time she spend in the factory. The worth of a craft has become so much duller. It is possible to replace one worker with a robot. Coming to the information age, the calculation of time has been complicated. One article said that a full-time job as a mother worth much more than what a corporate CEO bring home annually. It is. If we are using time as traded commodity.

It seems that the key to have more buying power that is practical is either: 1. To work more (time) or 2. To have a bigger value worth of your work (effectiveness, efficiency, quality result). Or… to have more access into values that is not categorized as ‘Need’.

Time or Access, which is more valued?

Lifestyle is a form of need combined with the luxury of having. Each person has different view of value. Difference here is because the quality of life we decided we want, how far we can do, and why can we not do it right now. Luxury can only happen when the flow-value is perceived as great or extravagant. This means that the condition of “luxury” only happen when you compare a state towards external factor. One can say a family lived a quality life, he worked 40 hours a week without overtime and he fulfilled his basic needs as a father in a family because his wife is also working. Both him and his wife has the luxury of balanced life. It all change when they have their first child. Now they need to think far ahead and make do financially for their kid’s University because their kid won’t be able to compete against the world if he isn’t a university graduate. As we know now a top university annual tuition is worth around the same of a one person full-time job. So to maintain the cash flow this family will need an external support of income, be it a loan, or their savings, or other ways. The access towards higher buying power can be achieved in two ways as discussed above. One is to work more time to increase end-of-day income, two is to have more value in their working time by having a higher paying job. On the first option, this family will sacrifice their time (and thus their luxury of balanced life). On the second option, this family will sacrifice their money because in hope of having a higher paying job, big chance the father will need to take a new course to update his qualifications in the society system. In this example, time is practically a currency to trade for income. Time is currency.

Our currency is not only money but also time. Click To Tweet

Looking from the majority’s point of view, statistics has returned results that “by 2016 the richest 1% could own as much or the same as the bottom 99%”[1]. We need to understand this discussion is not essentially talking the super rich who owns the yacht or something extravagant…the fact that owning a simple house in London (mortgage finalized) makes you the 1% of the world already. It is a problem of distribution and we won’t do anything about it because this is economist’s or actually it’s government’s job. What we are focused is more on the ‘how’ they are the 1%.. How much time and money have they sacrificed to be able to “climb” the society’s ladder…? How qualify their lives to be called a luxury life of bread and wine…? Next question is an important one; how far are they from their retirement age..?

As a younger generation we are having a debilitating fact that almost after a few years the retirement age is reconsidered. Reconsideration is more often out of our control and ended with not sooner but later retirement age. This blooms another different set of problems such as productivity (older is always lower productivity), population growth (the more workforce not always mean more economic activity) which we won’t discuss here. I am writing this not to be a complainer.. We are trying to think not only for ourselves, what about your kid if you have one..? …okay, but what about other people’ kid..? The same as the global warming issue, it is really hard to think about it if you have retired and really you won’t live more than 50 years as of now, right…? Hehehe, don’t get me wrong.. But I am not writing this to say that I won’t work my part of the society as contributor to income tax.. but even taxation systems has their toll if I were to point out not in this opportunity. Ohoho, this one is not for the economist to solve because this case is for all of us as the citizen of the world!

Going back to need-luxury, we have to realize that both of them share the same entity.. It is the entity of access. More time sacrificed makes more income, in the end: more access. More money saved makes more buying power (credit allowance), in the end: more access. Both need and luxury means access. As a person who just started their position in the society, we might feel so pitiful and ironic. Bravo!! This is why you are reading this.

Let me share one picture quote by one awesome person who has thought this out and even the solution for the human species to pursue, in his project The Venus Project. Understand more about access, time, money, and where we are going as a species. If people have access

Now, The Venus Project (Resource Based Economy) might not be running well until the next century, but I will still tell you my practical solutions in the Part 3 next week!

The practice is by understanding that both need and luxury means access, then both time and money is currency… Only by practising those you can adopt luxury and dare to desire evolution in your life. So gather your spirit and calm your mind, the world is beautiful, people are awesome !!

Before you read the part 3, I am not saying that I have fulfilled my needs and luxury. The fact that I have a sensible security of mind among these chaotic times is enough voice that I know what I am doing. I am trying to make it right, my style.. It works for you too !

Source: 1. BBC – Richest 1% to own more than rest of world