OUR TIME HAS BEEN STOLEN: Keywords: time-preference, Keynes and New Economics, Neo-Keynesians, consumption-saving-investing, natural interest rates, interest rates, Federal Reserve, history of money, hyperinflations, manipulation of the future, Franco Modigliani, James Tobin, Gary Becker, Bernardo de Galvez, Obama, Bide-Harris

 

We know who the Grinch is!

Our Most Scarce and Irreplaceable Resource

Has Been Stolen

A meditation on the value of time by Xuan Quen Santos

 

Time is the one-way path we call life.

How do we evaluate time preferences? I have tried the following exercise many times with pre-school children. I offer chocolates to a child with the following options: I will give you one piece now, before I tell you a story, but if you listen until we finish, I will give you two instead. Invariably, kids choose one right away. The smarty-pants will try to negotiate getting the second one at the end of the story. I have tried to raise the reward for waiting until the end of the story, but only one was a better negotiator than I. I stopped when the haggling reached the five pieces I had. I am sure this child went on to become a financial wizard and a patient listener. Just like most animals are opportunistic feeders with an uncertain availability of food, most children will tend towards immediate gratification.

We can imagine what the future may bring.

What if some animals know in their own way that the future will bring significant changes in the availability of food? I am sure humans in the not-too-distant past had this same awareness that we have forgotten with our world-wide open market economy of year-round abundance. Animals prepare for the future, aware that seasons will invariably change the availability of food. Many are seasonal migrants and others hibernate. This is particularly evident in regions north and south of the tropics. They sacrifice part of the present time and forgo its immediate gratification because they value more the food in the future when it is very scarce. There is something primeval in these patterns of behavior. We allocate our time depending on how we value with foresight what the future may bring and what the present offers now.

How we make this decision affects our most scarce and irreplaceable resource: our time.

What could be a universal truth is that if the same reward is offered now or later, without any conditions, all children would choose instant gratification. The difference in the value of the extra candy could be considered to represent the value of waiting. If we were going to get the same reward for waiting and not waiting, we would all choose not to wait. It is only when the future looks more valuable that we will sacrifice instant gratification for the possibility of a better outcome if we wait.

We have forgotten ancient truths

The grasshopper and the ants.

Just like the mother bear teaches her young cubs to forage the secrets of the forest and fish during the salmon runs, we used to teach our children to consider preparing for the future. Since the dawn of writing some 3,000 years ago, older ancient oral stories were used to teach. We have inherited two versions of one ancient lesson that you may remember from your childhood. A Jewish Proverb instructs us thus: “Look at the ants, do not be lazy. Consider their ways and learn. They have no commander, no supervisor, yet together they store their provisions in summer and gather their food at harvest”. About the same time, the Greek Aesop transcribed a longer version still available today in bookstores. Click on this link; it will take you back to 1934, to Aesop´s fable in a short and historic children’s moving-picture from the early times of animated cartoons:

https://www.dailymotion.com/video/x2t3i97

Preparing for life.

Just like we can prepare for the future interpreting the changes of the seasons, we also know that for each of us the one-way path will come to its destination. All of us must complete our life cycle, creating and producing to consume and save. The "life cycle" of consumption and saving was observed by Neo-Keynesian economist Franco Modigliani. He described people's overall setting aside a part of what they produced -savings- to consume later, and spending the rest of their income -consumption- to satisfy immediate needs or wishes. Most working people's lifetime income could be drawn in a graph that follows a hump-shaped pattern: It starts low, and it begins to increase during our youth; income rises to a peak during middle age, and it falls during retirement. If consumption is graphed on the same model, it can be observed that it is linear and horizontal. There is no significant change in the pattern of consumption. For most people, there are two stages in our lives that we do not make enough income to pay for what we consume. During our youth we are usually supported by parents and community institutions. We are usually self-sufficient and with excess income during our middle years, and then our income drops below our consumption in our later years. How are these periods of deficit in income -youth and old age- solved? The answer is very ancient.

Cocoa beans (Cacao) used by Mesoamerican cultures as money

Modigliani re-discovered how to make lemonade.

The stories of the ants and the grasshoppers have the solution. To smooth out the flow of what we consume we must save at times, use credit at times, and count with institutions and organizations that will make it possible. Training to obtain work-skills generated the contracts of apprenticeship. The master transferred to the apprentice his skills in exchange for almost free labor during a number of years. The apprentice sacrificed other personal choices during those years because he was investing in adding value to his future time. Higher education is costly, but it can be financed. Nobel Prize Gary Becker introduced econometric tools to analyzing the value of education. We are now used to evaluating the ROI (Rate of return) of college degrees and comparing the worth of the future value of the same degrees offered by different universities. The latest generations seem to not have done their homework. Many are burdened by college debt after obtaining worthless diplomas. Buying a car or a home can also be financed long-term. There are very visible connections with saving for the future. Paying the credit over a long term is done at the sacrifice of present consumption, thus it has the same calculation as putting aside a portion of our income for savings. We are willing to pay an additional premium for advancing the future satisfaction to the present; that is why we pay interest to the lender. The lender is foregoing present satisfaction to make the funds for the loan available to the borrower. Intuitively, we have known these operations as basic facts of life. Producing to consume is good. Setting aside part of the value of what we produce for what the future may bring or to obtain what we want is also good. Availability of credit is good as it really alleviates the cost of waiting. The emergence of money and prices expressed in numbers of monetary units are also good. I have not mentioned government or any state presence in the appearance of these institutions simply because when the first governments appeared, these institutions were already there.

Ancient Maria Theresa Thalers used by Saharan Bedouins
as their savings and wealth

The institutions that are the glue of our social order are not of human design.

Institutions that support our travelling through the path of time have been there since time immemorial. The fundamental rules that guide our behavior in a community, such as the values of honesty and respect of property are what makes it possible for credit to appear. Credit means credibility in the borrower. A supporting structure of institutions appears later, such as contracts and systems to solve disputes. The institution of money makes possible the preservation of created value into the future; grains are better than bananas to preserve the value of our work. The rules of the market lead to the spontaneous selection of metals for coinage. The market activity of a sufficient number of competing participants, buyers and sellers, develops a system of prices and money, and weights and measures. The emergence of numbering systems is a byproduct of the activities in the market. The family is another human institution. Its different forms are expressions of our own cultural evolution as adaptations. The same structure of relationships that exist in the family were transferred to other cultural customs. Among these are the rules of primogeniture that sought to keep the possessions of the blood-related group over time. The formation of patriarchies, chiefdoms, clans and tribes, and eventually nations followed. A specialized organization separated eventually from blood-relations for specific purposes: government. We have in our history a laboratory with many samples of organized forms of government. We are still searching for a better one or for a vaccine to control the spread of its power.

The institution of the family transcends time.

The institution of the family may have generated ideas about the governance of groups, but there are two more important functions of the family that have generated multiple other organizations: The preservation and transmission of useful knowledge (human capital), and the preservation and transmission of physical capital (From tools and machines to money as a liquid depositary of previously created value).  The first one encompasses formal and informal education, training and guiding young learners, and preserving knowledge for the future generations. Human capital includes the abilities deposited in the living generations, and the preservation of records, memories and stories. For three millennia they took form in writing, in books, and in libraries. They are now in electronic filing and retrieving, “somewhere up there in the clouds”, quoting Vice-President Kamala Harris. Families are also responsible for the institution of inheritance. It transmits forward in time the saved capital, one of the most important forces of economic growth. Many capital investments require more than a lifetime to take shape, and their stewardship requires more than one generation. It is families that are responsible for capital formation and “intergenerational wealth”. Leaving a better world for the future generations is not an abstract concept. It is you leaving a head start for the great-grandchildren you will not know. All is good.

Tobin rediscovers sugar-water and does not like it.

In 1974, another Neo-Keynesian Harvard economist, advisor to President Kennedy and the Federal Reserve, James Tobin introduced for debate the policy problem of “intergenerational equity”, which is now with us. Marx’s original proposal of 1848 to destroy capitalism included the total eradication of inheritance. “Death Taxes” are one of the ten essential policies to destroy our system that now are chanted by the mob agitators. In the U. S., it has already taken two forms: estate taxes and inheritance taxes. The federal government levies the first and many “progressive” states have both.

Candidate Obama was right, until he became President.

The minorities that claim for reparations for past chapters of the nation’s history would do well to re-examine the state of their families. It is no coincidence that President Obama, and many other leaders who claim some African descent, have been critical of the destruction of the black families. In June of 2008, while on campaign, he is quoted by the New York Times as having said: “…we need fathers to recognize that responsibility doesn’t just end at conception…” “…more than half of all black children live in single-parent households…” “Too many fathers are M.I.A., too many fathers are AWOL, missing from too many lives and too many homes…” “They have abandoned their responsibilities, acting like boys instead of men. And the foundations of our families are weaker because of it.” This was during the electoral campaign. Obama forgot his words, never meant them, or he did not see the connection with his policies as soon as he became President. During his two terms, death taxes were increased and his expansion of entitlements to “single-mothers” and fatherless children, as well as “food stamps” grew to record levels. For millennia, the roles of families directing the human capital into the future had not been questioned. The state control over it has grown in the last two centuries. Since time immemorial, capital formation and its projection into what can be called progress and better standards of living for the whole social order have been the result of family values. How many current attacks to the institution of the family do you know? How many do you support?

Ancient Roman Calculi, a first calculator

Organizations are established, planned and changed over time by express human design.

The organizations that we design to make operable the institutions are many. They evolve and change, adapting to growing populations and innovations. Contrary to what many believe, what we now call government has very limited functions, if any, in the aspects of the social order that involve the production, exchange, consumption and saving of what our labor and genius make available. It is the same in the aspects concerning the development of human capital. The takeover of the educational institutions dates only to the last two centuries. The institutions of our social order are not of human design but are the spontaneous result of our human actions. Organizations are designed, created and transformed by deliberate human action for specific purposes.

Everybody is a millionaire during hyperinflation

Money is not what you think.

The institution of money appeared in many markets, in many forms: cattle, beautiful small pink shells, cocoa beans, turquoise beads, jade ceremonial hatchets, arrow heads, giant wheels of rock, nuggets or dust of copper, silver and gold, and many types of grains. In the WW II POW concentration camps, cigarettes and chocolates served as money. Money begins as an item or good that many people value and can barter (trade) in the market exchanging them for other goods or items. Grains have utility as food, thus, attain a market price because many people sell them, and many others buy them. They are small; all pieces are almost equal and can last for a long time if properly stored. The typical weight of one grain of wheat or of barley were used as units to measure weights of other products in the market. Powder and bullet weights are still measured in “grains”. Gold and silver were used as jewelry long before they became standards for money. They were sold by weight at a market price, in either dust or nuggets. People soon learn that these type of market goods have multiple uses and are sufficiently available but not in abundance. They are first a commodity with attributed value and a stable market price. The second one is they last a long time and preserve their value. A third one is they can be obtained in sufficiently large quantities or even in small pieces; they are divisible. A fourth one is their liquidity; many people will accept them to trade even if they do not have an immediate need for them. They are easy to carry and store in the amounts of customary use. Finally, once they become widely accepted, their units become standard units for expressing prices, which is the last step that marks the emergence of money. The institution of the market created money, not a king or a bank, as is usually told.

Everything Midas touched turned to gold
Much like the Central Banks turn everything
to fool's gold

From King Midas to coinage.

The Greeks tell the legend of Midas, King of Phrygia, who a thousand years ago turned the Covenantus River in Anatolia into gold. Legends exaggerate, and later it was written that Midas turned everything he touched into gold and ended up in disgrace. He might have just discovered gold in the river. The Persians had in their records dating more than 600 years ago, the story of King Croesus of Lydia (Kroisios). He is said to have also turned the same river into gold. But the Persians have details that are good clues to what may have really happened. Croesus, the chief of a tribe of miners in the city of Sardis, next to the river of gold, dominated the Greek cities of the Anatolian coast, in present day Turkey. The famous Emperor Cyrus of Persia, in his eagerness to conquer Athens and its colonies, made Croesus his vassal and copied the product that had made him famous. Sardis was halfway to Greece and Croesus became a Persian governor or satrap. The clue is in the product that Croesus sold which all the merchants of Sardis and passersby had begun to use to trade. The ancient Phrygians under King Midas, and the Lydians under Croesus’ ancestors had discovered that Mount Timolus, from which the river flows, had deposits of gold, silver and other valuable metals. They smelted the minerals and nuggets, producing a natural alloy of gold and silver they called “electrum”. They later separated the metals for minting. Croesus's father, Alliates had the idea to cast the metals in uniform molds and produce circular "medals" of equal weight, size and appearance. Mass production discovered! This made it easier, even unnecessary, to weigh with traders once they recognized the high quality of their metals. As a seal of guarantee, Croesus used a hammer to stamp on them the effigies of a lion and a bull. Certificate of origin and quality discovered! The market accepted them, and they spread throughout the area. That is the probable origin of the coins that neither Alliates nor Croesus imagined would eventually become money. They were just selling in the market gold and silver at their milled metal price, in uniform units with a stamp of origin and quality. Croesus’s coins can be seen in many famous museums. An authenticated gold stater of Croesus’ era was sold recently for almost $ 200,000. The un-intended invention spread. The lords still love to see their effigies in the money they control. The English word “money” and the Spanish word “moneda” originated in the name of the Roman Empire’s main mint, located in the Temple of Juno Moneta. By then, the government (The apparatus of the state) had taken over the mineral wealth and the monopoly of minting coins. There is a secret that politicians discovered that motivated the takeover besides their ego being displayed in everybody’s hands.

Notice the United Colonies. The U. S. A. was never intended.

The secrets of controlling money.

“Seigniorage” in French describes the main motivation behind the takeover of the market institution of money. This medieval word describes the privilege of the lords (seigneurs) to mint coins. It is the profit made by a government when it issues metallic currency (coins in antiquity). It was the difference between the market price of silver, gold or copper in bullion, and the minted or set price of the coin as money. Essentially, it is a form of financing that the government gains from its control over minting money. The possibility of an oversupply of the precious metals was regulated by the lords having exclusive rights over the mineral wealth. To this date, payments to the owners of mineral rights are called “royalties”, meaning the king’s share. Since they appeared, We, the People, have hated taxes when they do not reflect the value of the services performed by governments, which is often. For this reason, politicians avoid talking about raising taxes because it means risking their heads and thrones, or their powerful positions as Prime Ministers or Presidents in modern times. It did not take long for the avarice of the lords to discover another secret to increase their profits from the monopoly of money: they could change the proportions of silver or gold by adding other minerals, like copper or nickel. They would melt the good coins and re-mint greater amounts of the adulterated coins. Read the warnings of the Biblical Prophets Isaiah and Ezekiel. This had always been known as monetary inflation, until all kinds of excuses were invented by political economists hired by the lords to hide their responsibility. Why is monetary inflation undesirable? Because it causes a generalized increase in the market prices! It destroys the value of the unit of measure of all the wealth that exists in a country! The inflation of prices is another hidden tax that takes time to be noticed if the lords are discreet, but they have a tough time keeping their avarice under control. Since the times of Hammurabi, King Salomon and the Roman Emperors, the lords have evaded responsibility for the inflation they caused. Their typical responses have been to impose price controls, blame the wars with the neighbors, or the greed of the merchants. The social crisis that grows as inflation increases invariably ends in the disappearance of great emperors and empires.

The Money Changer by Marinus. Medieval goldsmiths,
bankers and trading houses.

Money matters are separate from the interests of politicians.

If the anecdote of the miner Alliates and the accidental transformation of his descendants into the famous king-inventors of money does not convince you as evidence of the emergence of coinage as a spontaneous institution resulting from the market activity, research the story of the “Maria Theresa Thaler”. Originally, a high quality of silver coinage imposed as a standard throughout the Austrian Empire since 1741, it became the free-market currency in central Africa and it is still used, centuries after the coin disappeared as legal tender in most of Europe. The thaler is the ancestor of the Spanish Duro (Real de ocho), many silver Pesos and the silver US dollar (phonetic “daler”). Another example in modern times is how the U. S. paper dollars spontaneously become the market currency of the failed states around the world even though their possession is forbidden; these dollars are out of reach of the FED and of the local dictator’s central bank. They attain a free market price in the locale where they are, regardless of the exchange rates for the U. S. dollar in the world market, or the imposed legal rate. The big difference between the ancient silver thalers and the paper U. S. dollar is that silver will always have a metal market value. The U. S. dollar is not even good as paper, and its value may be reduced to the price of confetti for carnival if the U. S. economy fails too. Pay attention to how the Biden-Harris government has depreciated the value of the U. S. paper money and how rival countries are preparing for its collapse with the rise of the BRICS agreement. Bitcoin and other cryptocurrencies are being promoted as the government-free currency of the future. The idea is not new.

Everyone believed Marco Polo was crazy
when he described paper money

Should money be a government institution?

When did governments as organization of men take control of money? The organizations of mines, minting and coinage, money-changers, the invention of “the calculi” and the “abacus”, the pawn shops, the letters of credit, the banks, checks, paper money, credit cards and EFTs are of human design. When did governments take control of the banking system? The answers are simple. It was so long ago that our modern conceptions of money and banking can´t conceive them as separate from the functions of what the state apparatus is supposed to do. The birth of the discipline of economics as a science, separate from philosophy, jurisprudence and history, began with the self-adopted name of Political Economy during the rise of “Positivism” in the early XIX Century (A. Comte in France and J. S. Mill in England). It follows that economists should have kept the titles of political economists, clearly devoted to a vision of the collective phenomenon of political organizations, mainly the state apparatus. Since then, the popular view has been that they formulate “policy”. Positivism became progressivism, morphed into socialism, and after its failure it is now the “New Economics” of Keynes, known also as “mixed economies”. Two centuries later, the compounded errors of the self-proclaimed “scientific socialism” [from Marx-Engels and Comte to Lange, Myrdal and Kantorovich, to the modern American exponents (Amariglio, Baran, Bowles, Foley, Foster, Gintis, Gordon, Krugman, Magdoff, Piore, Reich, Sweezy, and Wolff, all U. S. Professors), and all the establishment Neo-Keynesians that are in control of the current and recent bureaucracy at the U. S. Treasury, the FED and its regional branches, the U. S. State Department, and the Biden-Harris’ Council of Economic Advisers]are imposed on the lives of We, The People, through legislation, abusive over-regulation and administrative rulings, and dictatorial edicts that take the form of Presidential Executive Orders. How long can this continue?

The first American Hyperinflation. Saved by Spanish silver.
Is another one coming?

The only effective control to the abuse of money was lost.

The history of money, from its earliest times to the selection of what since then we call “precious metals” and coinage, had its own safeguards: the scarcity of gold and silver and their natural qualities of color and hardness. Scarcity prevented hyperinflations like the ones we have often seen in modern times. Some historians have identified as such the flood of Aztec and Inca gold and silver as the main reason for the decline of Spain and the Austrian emperors in the XVI-XVII centuries. Color and hardness (softness) allowed consumers to test each coin. You probably have seen the habit of biting coins and metals, but most likely, the biter was just imitating something seen in the movies. A bite can dent a real gold or silver piece, even when more modern alloys avoided pure metal because they were too soft. A more formal test could be made by the professional money-changers with the use of weights. The introduction of paper money is worthy of a book of history. Paper money is attributed to the XII century Emperors of Cathay (China), and it was described by Marco Polo in his book of travels that Europeans read with incredulity. The evolution of this form of money probably dates to the semitic merchants of Jewish or Muslim tribes that had family representatives in distant cities and ports. It was dangerous to travel with real coins, and in the large quantities that would be needed for large transactions, their weight was a problem. The solution was the equivalent of a “letter of credit” that worked like today’s bank checks. One merchant in city A, after receiving a sum would provide the traveler with an order to his merchant cousin in city B to extend credit, or advance money to the traveler for the same amount already paid to A, minus a commission. The cousins would settle the matter between them in due course of their own transactions. This system operated in the ancient world and was later copied throughout Italy after the experience of the Crusades. It is one of the business practices that made famous the medieval merchant republics of Venice, Genoa, Florence, Pisa and others. The Hanseatic league of the main cities of northern Europe followed the model. Later, they all began to operate as “vaults for private treasures” and issued bills of receipt with the obligation of returning the coins or bullion after collecting a fee. These vaults soon minted their own coins. The bills began to be issued in standard amounts and they soon circulated in the market as payable to the bearer; they are the precursors of paper money. The next stage registers the emergence of bankers, like the Medici, Fugger, or Rothschild, that also gave credit. Credit was as old as the appearance of coins. There was a problem that persistently appeared. The powerful lords also wanted loans for their armies or palaces, but often did not pay them back. This included many Popes. King Charles I of England, who was fighting with parliament, raided the common vault of the goldsmiths of London who were also one such primitive banker. This created an economic crisis that had a lot to do with the exemplary trial and execution of a royal by a court and parliament. Charles I was decapitated. The Swedish royals thought they could just issue “bills of credit” to buy what they wanted without any real backing or intention to pay. Another economic crisis broke, and more crowns came down. The biggest scandal of the abuse of the power of governments to interfere with the private, evolving business of money and banking is the story of John Law. He tried in Scotland and had to flee, he tried again in Holland and had to flee again. Finally, he got involved with the royals of France and began the largest speculative fraud by backing the capital of the bank he established by selling shares in the company that was to exploit the recently claimed territory of Louisiana. He issued paper money backed by the worthless shares. Historians now refer to this boom-and-bust event as the “Mississippi Bubble” of 1720. All these stories make interesting reads, like the next one.

Read the text. It is an obligation to redeem in silver.
Congress did not have any. After the war, it never paid
most of its debts and there were several insurrections.

Not worth a Continental!

Have you heard the expression “It is not worth a Continental”? It has been discreetly hidden. It is very embarrassing and tarnishes the memory of the Founding Fathers of the U. S. The 1776 American Revolution almost failed due to hyperinflation caused by the Continental Congress. King George III, as part of his strategy of pressing for a surrender, began to withdraw the English coinage from the market and confiscated silver where he could, even what was used as silverware. Patriots could not buy much once their own English coins were spent. To supply the war effort, and keep the market going, the patriots began to issue the equivalent of paper money in 1775. Some limited issues of paper currency had been previously allowed in a few of the colonies. Ben Franklin printed “3 pence” bills backed by the crown for Pennsylvania. The war effort required more financing and Congress ordered 11 emissions of Continental Currency equivalent the amount of 226 million Spanish silver Pesos (thalers=Dollars) without any reserves. At first the patriot currency circulated at par with the Spanish silver dollar. But soon, the glut of bills issued without any financial revenues led to the depreciation of the Continentals. Fewer and fewer people accepted them. The army did not have enough provisions, and soldiers were threatening to go home. In January 1777, $1.25 of Continental Currency could purchase $1 in specie (gold or silver coins). That is a 25% depreciation or loss in what people could buy. A year later, price inflation had created panic and a crisis. People required 100 Continentals to exchange for one Spanish dollar. That is an inflation of 10,000 %. The Continental money collapsed and disappeared. The American Revolution was saved by support with loans in specie from Dutch bankers through the New York (New Amsterdam not long before) Jewish leaders and by coinage in Spanish Pesos minted in Mexico by the Spanish Crown. At that time, the Louisiana Territory and the Mississippi River mouth (Nueva Orleans) were a Spanish possession. The Spanish Governor, Don Bernardo de Galvez, closed transit to the English fleet and sent provisions and silver money to the Continental army. Keynesians have forgotten to read this chapter of U. S. history. So has the American public. Read about this Spanish warrior that saved the flailing revolution of 1776.

https://www.historynet.com/americas-spanish-savior-bernardo-de-galvez/

Paper money controlled by the government is not the solution.

Paper money did not work because the credibility of the reserves exploded amid a scandal of speculation with the shares. The scheme collapsed but a new one was devised. The idea of mandating a fractional reserve to guarantee liquidity to depositors was tried next, but bank scares created panics and generalized banking crises, with subsequent economic chaos. Someone thought that banks needed to be a monopoly of the state, so many were nationalized. The national bank scheme was tried but abused too, of course, by politicians. There was also another problem besides inflation. By mistakenly assuming the interest rate is only related to money, and money had been monopolized, the interest rates began to be set by policy and not by the market. Invariably, just like all price controls lead to imbalances, mismatches, or differences, too low rates will lead to excess borrowing and capital waste; too high rates will slow down the economy and increase most other prices in the market. This is the cause of what we have discussed before as the problem known as “the business cycle” of boom and bust. It is not caused by the free market, private bankers and free interest rates. It is caused by politicians and political economists that cannot know the future: all prices, including interest rates, are continuously fluctuating market prices; they are coming from the future and reflect the dynamic of an ever-changing infinite number of people’s choices.

King Charles beheaded after order of arrest by Parliament and a Trial by Jury
Nothing has been the same for royalty since then. 

What is the most scarce and irreplaceable resource that has been stolen from us?

It is our ability to manage the value of our time, in liberty, as best we can while pursuing our happiness. Our life is our time. Our liberty is what we can do with our life free from interference by others. Our happiness is what we want for us and our descendants. We want to live in peace and in community. We respect the similar aspirations of others. We know that cooperation and interdependence by trading raises the material welfare of all involved. We know that as we freely exchange, units of common value and prices appear as information available to all. As each one of us arranges our time and resources to be increased and consumed while we travel on our path, a natural price for the value of time appears that is part of all other prices. It has been called many things but is now known as “interest”. It is the result of our differences in our time-preference. It allows for the peaceful and just exchange of the resources to be consumed, saved or invested into the unknown future. It establishes a dynamic balance that harmonizes how each one of us values what time may bring. This price is a natural interest rate that appears among all other prices and informs us of how the community values its future. A community that does not value its future, does not develop a minimum common vision of what is necessary to bring it about. Without it will soon perish.

If our unit of common value and expression of market prices is manipulated, our judgement is misguided. If prices no longer reflect our choices and value of time, our decisions are flawed. If interest is no longer a reflection of our free valuations of time, our own valuations are being set for us.

We are no longer free if we can no longer decide how to make the best use of our time along the path of life.

 

Next: The social and emotional consequences of the manipulation of money and credit.