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MyCHIPs Digital Money

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The Argument for Time Money

In order to be robust, money should be backed by, and measured according to, a standard, known commodity. This provides the best assurance against the kind programmed inflation and exponential growth inherent in central bank, fractional reserve currencies. Not quite as obvious, it also protects against the kind of programmed deflation inherent in Bitcoin and other fixed-supply models.

Most people recognize that properly backed money will retain its intended value much better than fiat money. But there is a potential pitfall to this approach.

Once we tie our money to one particular commodity, there is a natural temptation to try to corner the market on that commodity. In other words, some may try to monopolize the supply of that commodity so they can manipulate the value of the money. With that control, they can assure a flow of wealth and power to themselves, even if they haven’t earned it.

Stated more simply, if money is backed by gold, only the people who already own gold can issue and control the money. The same can be said of any other commodity we might choose.

Perhaps surprisingly, this also applies to Bitcoin. Once the fixed supply of coins has been mined, those in possession of existing coins are in control of the market price. Everyone else has to buy in at prevailing prices, based on supply and demand. This is one reason why Bitcoin is prone to such volatility, or booms and busts.

Of all the commodities we might choose, human work potential is the only one nearly all people have their own, private supply of. Time based money is the ultimate in fairness and equality.

When money is issued against our own work, we have much more control over our own futures. We can decide if we want to save up for a purchase, or if we want to use credit to buy something now, and then do the work to earn it in the future. This kind of liquidity can not easily be monopolized—at least as long as we resist the urge to reinstate slavery!

To clarify, CHIPs are not based simply on time, but rather the work we do using our time. So in a sense, it is like basing our money on all available commodities at once! Whatever we produce of value, that is what backs our money.

This means individuals can be in control of their own purchasing power. They can decide if and when to issue credit, and how that credit will be used.

Let us now address a benefit of productivity-based money that is a bit more ideological, but still of great value. Historically our money has been measured against other kinds of commodities—most commonly some specified amount of a precious metal, such as gold or silver. More recently, the US Dollar has been allowed to float, being tied only to the general economic condition of the country.

When the currency is measured in such an abstract way, it is easy for us to lose track of what it really is. We begin to think of money as being its own thing, rather than an obligation, ultimately to be redeemed by someone’s future labor. It is also easy to lose track of just how valuable our own work is, in relation to each unit of money.

Consider the minimum wage debate. Most advocates of such regulation, do so on the basis of fairness, equity, or decency. For example, “how can we expect a person, much less a family, to survive on just ten dollars an hour?” When using an abstract currency such as Dollars, this argument seems pretty reasonable.

But let us change the words we normally use to better remember what that money really is: a debt to be fulfilled by someone’s sweat and toil. Does that gives us any new insights?

For one thing, it becomes a bit more arbitrary to draw such a clear distinction between employer and employee. True, one trades his own work, and the other trades only work credits or in other words, other people’s work. But just by clarifying the language, it is easier to see that time is being traded for time, work for work, and value for value.

For example, let us again make the argument for a minimum wage with the new terminology of time money: “No one should be allowed by law, to trade an hour of his work time for anything less than three hours of someone else’s work time.” How is it possible for everyone’s time to be more valuable than everyone else’s?

Perhaps the question of whether a person can “survive” on only one CHIP per hour is not a question of social justice, after all. Maybe it is simply one of economics—something we can break down in a more scientific way. For example, how much time must a person spend working for his own survival, and how expensive, in comparison to his own productivity, are the things he needs to purchase from other people?

Said another way: Can a person with no particular skills, working full time, support himself and the needs of any dependants he may have? And if so, at what standard of living? Now, rather than just trying to somehow force the value of everyone’s time to be worth more than everyone else’s, maybe we can begin to consider more authentic and sustainable solutions to poverty. For example, how can we organize ourselves most efficiently to assist those who can not adequately provide for themselves?

A better question is: How can we minimize poverty while still respecting the right of people to engage in free and voluntary trade with each other? We can address such questions more fairly and equitably when using money that helps us remember the ultimate measure of value: human time and effort.

For example, some people have been unable or unwilling to develop marketable skills, so they may be valued in free exchange at only 1 CHIP per hour—maybe less. Many can invest in themselves and develop greater abilities that are in demand by others. If not, society can invest in them to achieve the same results. There are no upper, or lower limits on what a person can earn by their labors.

Using time-based money will not solve all our problems. But it certainly can help us understand some of them better. And that is a great first step toward a genuine solution.

So how do we accomplish this? Admittedly, this notion of properly defining a “standardized CHIP” is still one of the biggest potential technical hurdles. After all, an ounce of pure gold is pretty much the same anywhere in the world. It is more difficult to define what a standard, unskilled hour of work really is.

Still, we will do it.
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