The Gold Rush of Time
Throughout the history of the human race, the only enduringly successful monetary measuring stick has been gold. Under the rigorous mastery of Isaac Newton as master of the British mint during the early 18th century, assuring the chemical integrity of gold, Britain launched the gold standard as global money.
Since many nations adopted the gold standard for their currencies, many historians imagine that money was a sovereign attribute. But throughout the world, the ultimate measuring stick was gold — a universal gauge beyond the control of governments.
The reason that gold prevailed is because it was actually a measure of time. Through most of human history, the time to mine an incremental ounce of gold has not significantly changed. Today, a giant automated mine that takes 10 years to develop can deliver ounces of gold no faster or more cost effectively on average than a prospector by a stream with a sieve and a pan during the California gold rush.
In other words, unchanged over the centuries is the time-price of gold, as my indispensable advisers Gale Pooley and Marian Tupy define it by the number of hours and minutes a worker must spend to earn the money to buy goods and services.
“Buddy, can you spare a dyne?” My counsels Ralph Benko and Dawn Talbot believe that this time-price unit should be universalized and dubbed the dyne. Related to the Newton, it is a unit of force over time adopted by the International System of Weights and Measurements.
I was skeptical, but I won’t balk if the world can resolve on universal dynes to replace the epistemic chaos of currencies and consumer price indices, purchasing power parities, hedonic adjustments, GDP deflators, and other indices that confuse every price in the world economy.
The first rule of money is that it be scarce. It must offer a method of gauging the tradeoffs and priorities needed in any entrepreneurial project. If money is not scarce, it tells governments that they can do anything and everything at once.
In this vast and cornucopian universe, where all the atoms and electrons eternally survive, human beings face no serious scarcity except the inexorable passage of time. At 24 hours a day, time is what remains scarce when everything else becomes abundant.
Time is the inescapable regulator of every entrepreneurial plan and economic outcome.
The Most Successful Money
So back to the Cryptocosm. To make bitcoin an appropriate money and guide for entrepreneurs, Satoshi made it scarce, imposing a cap of 21 million units.
Thus, he ignored the other crucial feature of time. It is not only scarce; it is also infinite. A successful money must combine these two features of time as a paradox of scarcity and infinitude.
A successful money must impose no rigid limits on its total supply. It must be governed ultimately by the expansion of knowledge and learning as manifested in the willingness of entrepreneurs to assume the risks and possible downsides of business projects.
As Mervin King, former Bank of England chieftan, explains: Financial hypertrophy,
“separated the scale of bank balance sheets from the scale of real household business activities…Lending to companies is limited by the amount they wish to borrow [but] there is no corresponding limit on the volume of transactions in derivative financial instruments.”
The same is even more true of governmental issues.
But just as important as preventing excess issuance of money is provision of needed funds for entrepreneurial activity.
The crash of 2000 was caused not by excessively abundant money in a tech “bubble” but by excessive monetary scarcity in a tech boom, during which the dollar shrunk 57% against gold.
Money must expand in proportion as it is needed to conduct transactions, perform experiments, and launch projects. It must be an infinite as the entrepreneurial imagination and as limited as the 24-hour day that defines the dynes or time-prices required to conduct business.
This is the challenge of the Cyptocosm, which I will attempt to answer in another prophecy.
Editor, Gilder’s Daily Prophecy