Anthony Woods of the Keystone Schools of Advanced Studies suggests a radical new money system based on time. Is this the craziest thing you ever heard? Or sheer brilliance? You decide.
Since the earliest of times humans have used various forms of money. Stones, livestock, barter, gold, paper and digital currencies have all been used. When the USA abandoned the gold standard in 1971 the dollar was no longer backed by gold, silver, or anything physical – it was backed by confidence.
Money is an idea backed by confidence – its a confidence game. When the confidence in an economy plummets so does the value of its currency. When confidence in a company falls so does it stock. At its essence money is a manmade form of measurement just like an inch and saying humanity could run out of money is as ignorant as saying we could run out of inches. The current global monetary system is not perfect and is in serious need of an evolution. The problems with the current system are numerous however the key issues are:
– Billions are caught in a poverty trap with little opportunity to progress
– The money game is manipulated by powerful countries and institutions
– Developing countries are at a serious unfair disadvantage.
What could you achieve if money was no object? What will our species achieve when money is no longer an object? The monetary system we presently use was largely designed during the industrial age 300 years ago and is in serious need of an evolution. Tools from the past won’t create the future. The advancement of civilisation is determined by output – our ability to do more with less – which is determined by our tools.
Money is a tool. And the author offers a suggestion to revolutionise money which he calls time dollars. Time dollars is an idea for the visionaries, the leaders who dream of building a better world for generations not yet born. It offers suggestions for our evolution as a species, none of which you are asked to believe or agree with – as with all education its only purpose is to help you think differently.
Education is the ultimate renewable resource. It’s like a candle. A candles light does not diminish by lighting other candles and the combined light just grows and grows. Humans have already lit up the planet, it’s time to solve the problem of money once and for all so we can take our place in the cosmos. The best way to predict the future is to study the patterns of the past.
So let us take a very brief and oversimplified look at human history with particular reference to the evolution of knowledge, tools and money. You will notice the following patterns:
– Human knowledge continues to accelerate as civilisation advances
– The power of human tools continues to multiply enabling us to do ‘more with less’
– More suitable forms of money have been created at each stage of our evolution
Humanity has already evolved through six ages with the author predicting a seventh Golden Age, The Age of Wisdom.
– The Stone age
– The Bronze age
– The Iron age
– The Dark ages
– The Industrial age
– The Information age
– The Age of Wisdom
The stone age started when our earliest ancestors began using stones as tools several million years ago. The barter of food, livestock and tools were the earliest forms of money.
This age dawned from the advancement of metalworking knowledge and the widespread use of the metal alloy bronze to create tools such as knives, spears and implements. Money evolved into precious metals and coins.
The Iron Age
This age dawned from the further advancement of metalworking knowledge and the widespread use of the metal alloy Iron, as well as the adaption of more sophisticated agricultural practices. Iron was mainly used to create tools for agriculture (mass production) and tools of warfare (mass destruction). The use of gold and silver coins as money increased dramatically.
The Dark Ages
The spread of several mass religions led to a huge increase in warfare and a rapid economic, intellectual and cultural decline as the world was riddled with priestcraft. The first use of paper money began in this period, a money backed by confidence in the promise to exchange the note for its equivalent in gold or silver on demand. One ounce of gold backed one bank-note.
Further knowledge advancement during this period led to the development of industrial tools such as factories, railroads and steam engines. The money system evolved to use the gold standard – a ‘fractional reserve’ system where one ounce of gold now backed five hundred banknotes. This meant that central banks could now create (they prefer the term issue) huge amounts of money, many multiples of the gold that they held on deposit. When these new banknotes were deposited with regional banks, they themselves could then create even more multiples of the original deposit through lending – usually ten times what they held on deposit. One ounce of gold became five hundred banknotes which in turn became five thousand banknotes of debt. Once there wasn’t a run on the bank due to a lack of confidence the system functioned. However, without confidence the system crashed (which happened in 1929.)
Rapid knowledge advancement during this period led to information tools such as radio, telephone, television and eventually the internet. As the power of human tools rapidly increased, people were empowered to ‘do more with less’ and global output exploded. Digital money developed alongside banknotes. When the gold standard was abandoned by the USA in 1971, banknotes were no longer backed by anything other than the credibility of the country that issued them. The ‘fractional reserve’ system remained. So, central banks could create virtually infinite amounts of new money out of thin air and local banks could then multiply it tenfold via lending. Credibility became currency. Modern money became nothing more than an idea backed by confidence as both central and regional banks could create money from thin air. Once there isn’t a lack of confidence the system functions. Without confidence the system crashes (like in 2008.)
Modern money is backed by nothing more than the confidence of the public. If a country goes bust the IMF, the lender of last resort, can issue its own money (IMF Bonds). These are backed by nothing but confidence.
Modern money has no value other than we give it. Value is a perception. Like beauty, value is in the eye of the beholder. There is no absolute value to anything because what some value others don’t. Money is the closest thing we have to a universal store of value. The current money system is flawed, and a better form of money is needed. Since money is completely manmade anyway, we may as well invent a system that works for all humanity.
Modern money is simply a tool that needs to be redesigned. It has served its purpose and like everything else in the universe it needs to evolve. Money is neutral and like any other tool it simply multiplies our nature – it just makes us more of what we already are. However, because money is so essential to the development of civilisation, the nature of the money we use has a disproportionate effect on society. If the system works for all levels of society than the entire species and planet advances. If the system only works for a few than both the species and the planet suffers.
With enough money you are free to do whatever you want. You have freedom. The opposite of freedom is slavery. Until we as a species master money the masses will always be slaves to it. What could our species achieve if money was no object?
To understand something, we must understand its nature and to in order to reinvent money we need to understand the nature of money. It has three main characteristics:
– It’s an agreed medium of exchange
– It’s a store of value
– It’s an idea backed by confidence
The first two characteristics are everyday definitions of money. However the third is where the rubber meets the road. Money is an idea backed by confidence. It’s a perception, nothing more than an agreement to believe in an idea. For example, imagine you were in New York with two $100 banknotes, one issued by the US Federal Reserve and one from the board-game Monopoly. Both are pieces of paper with $100 printed on them. Only one can be used in a store because the merchant has confidence in it. Value is a perception.
What happens the perceived value of the US dollar when there is deeply worrying economic news? The value of the currency falls when confidence falls. Now your $100 dollars has less spending power. What happens to the value of that same $100 US dollar bill if it turns out to be a forgery, a fake banknote? Its value falls to zero, it becomes worthless. Money is an idea backed by confidence. It’s an agreement, a token, a promise.
Many of humanity’s problems lie with the nature of money. It often brings out the worst in people. What is needed is a money system that brings out the best in people – a system that works for everyone. There will always be rich and poor – not to think so is naïve. However it’s very possible to create a civilisation where the poor of tomorrow can live like the kings of yesteryear and enjoy a quality of life our ancestors could only have dreamed of. That is, better healthcare, transport, education, technology, sustainable industry etc. This isn’t a fantasy – it’s very possible.
The earth has an abundance of resources – more than enough to provide an incredible quality of life to all its inhabitants, not just humans. For example, the planet receives more energy from the sun in a single second than humanity uses in an entire year. How much of this free energy do we harness? Almost none, because we have not yet developed the brainpower or technology to do it. There is no absence of resources on earth, only an absence of resourcefulness. Since money is made up anyway, we may as well invent one that’s fit for purpose.
So let us examine time dollars as a suggestion for new type of global money. The primary problem with the current money system is that very often those who want to earn more simply cannot. There are billions of people all around the world who are caught in a poverty trap. Earning a living, gaining an education and a decent quality of life are simply not an option. Putting food on the table is a daily struggle and survival is the name of the game for most humans on earth.
The way to solve that problem is to use time dollars as a method of exchange. This is not a new idea. Time dollars has been successfully trialled across the world over the last century and it was shut down. Not because it failed, but because it was so successful that it started to undermine the official currency of the region.
Here’s a very simple example of how it works. Both John and Mark both start out with a $0 balance in their time dollar accounts. John performs 10 hours of work for Mark for an agreed fee of $100 time dollars. John’s time dollar account is now + $100 while Marks is now – $100. John can then use his $100 balance to purchase goods from anywhere he pleases. Or, he can keep this money on deposit while Mark can perform work for others and earn time dollars for himself.
This system mirrors exactly how the current money system works with one critical difference – the money was simply created by John and Mark. A third-party bank was not needed to create it. With this system the only use for a third-party bank is as a ‘scorekeeper’ to keep record. The beauty of this system is a person with no money can solve a problem for another person with no money and create money!
Mark did not need to have money in the bank or pre-approved credit to make the purchase and John was able to earn money. At all times there is a counterbalancing transaction – + $100 and – $100 in this case resulting in a net $0 charge. Opportunity and wealth have simply been created out of thin air.
With this system every able-bodied person on earth has a genuine opportunity to earn money and live in dignity. Imagine the prosperity this system will create when used by billions all across the world. Just like a hurricane starts as a breeze this solution will start as a pilot project in an area ravished by poverty and quickly spread due to its effectiveness.
Once time dollars starts, it will spread like wildfire. Merchants will start accepting it as a form of payment and there will simply be no stopping it. People will essentially vote with their feet. Because participants are all voters, politicians will be forced to embrace the idea and figure out a way to make it a mainstream global solution.
Vested interests will resist the relentless march of time dollars and try to shoot it down. However, they won’t be able to kill this revolutionary idea because ideas are bulletproof. Imagine this on a global sale. Productivity and prosperity would explode. This is the key to world abundance. Time dollars would spark an entrepreneurial revolution the like of which humanity has never seen before. More progress would be made in one decade than in the previous thousand years.
There will always be rich and poor (it’s impossible to have one without the other). However, this system will reduce the levels of extreme poverty on earth. Using this system, the population can create their own money in a highly efficient perfectly balanced system. A central bank is not needed to create an inefficient system that funnels newly created money through the hands of incompetent politicians and greedy bankers. Global central banks and governments will develop scorekeeping technology to ensure the integrity of the system and maintain stability. As technology develops an instantaneous scorekeeper system will be developed based on the marvels of quantum entanglement. It will be a system that will require no physical technology and cannot be cheated.
Before time dollars becomes mainstream many businesses will use it for ‘off peak’ offers until such time as time dollars becomes a ‘dual currency’ in the same way as credit cards did when first introduced. Once people can use time dollars to buy everyday items they will become mainstream and global currencies and bonds can be exchanged for time dollars. In order to ensure the price stability of time dollars as usage increases, its value will be pegged to the average of the world’s three largest currencies. This will ensure its stability and also make it more attractive as a ‘safe haven’ store of value.
Over the last few centuries, the currencies of the world have been consolidating. As a species we are moving to a one global currency system which is a lot more secure. Countries are uniting into large ‘trading’ blocks like the EU and more super currencies like the euro will form. The logical conclusion is that the entire world will use one global currency that works for all humanity. Time dollars is that solution. Not only will time dollars create income opportunities for the entire species, it will also make each individual user and therefore the entire species smarter. This is because it’s an ‘education backed currency’ where people are paid to learn.
Education has been and will continue to be the spark that powers human progress. However the current problem is that there are so many barriers to top-quality education. In developed countries it’s very expensive. People often leave college with so much student debt it is like having a mortgage without the house. In less-developed countries, there is little access to quality education and billions of brains never reach anything remotely close to their full potential.
Ultimately, we are all paid to add value by solving problems. The more value we add to the lives of others, the more we earn. Our ability to add value is determined by what we do with what we know. While there is a limit to how hard we can work, there is absolutely no limit to how smart we can work. The more we learn the more we can earn because we can contribute more value to society. It’s the ultimate win-win arrangement. With time-dollars people are paid to learn. They are rewarded for getting smarter by earning time dollars for each hour they spend learning. The more advanced the subject, the more they earn. Education will be delivered both online and offline. Anyone with access to the internet can learn and earn.
For those with no internet access a community school system will be created to teach basic skills like agriculture, reading and writing etc. This system will provide a ‘universal safety-net income’ for all of humanity. This is without giving people something for nothing and replace social welfare in all but the most desperate of situations. Giving people something for nothing ends up breeding a culture of entitlement and quiet desperation. However paying people to learn makes the learner and the species smarter.
There is truly no limit to what someone can learn and contribute once they are interested in it. Students will have the ability to learn literally anything they want and get paid for the process rather than get something for nothing. This system will also provide a world-class education system to the entire planet, most of whom would never get the gift of learning and will drive huge advancements. As the collective brainpower of the species rapidly increases, so will productivity and the global economy. Billions of new potential customers with money to spend will be created. This will lead to a sustainable, abundant civilisation that works for all humanity and is in harmony with the planet. Illiterates will benefit hugely from the system. Once people have the basic skills mastered (reading and writing) they can continue to study absolutely anything they want and get paid for it. Music. Sport. Science. Business. Medicine. Computer games. The breeding habits of the kangaroo – whatever they want.
Every person on the planet has the capacity to create something special and this system will empower each individual with the time, money and knowledge needed to make their mark. By paying people to learn we have now created a second opportunity for someone in poverty to earn. Not only can they earn time dollars by adding value to the lives of others, they can also earn time dollars by becoming smarter and therefore able to add more value. There is no reason why someone couldn’t become a doctor, scientist, entrepreneur, teacher, musician or anything else they wanted using the powerful lessons they learned as they earned time dollars.
Ignorance is the true enemy of humanity and as we slowly climb out of the slime of ignorance we need to build an ability to make our entire species smarter. The whole point of education is for people to be able to add more value and therefore make more money for themselves and add more value to the lives of others.
Today’s money is an idea backed by confidence. Tomorrow’s money will be an education-backed currency. The more difficult the subject, the more people are paid to learn in the short term and the more they can earn in the long term. This gives everyone the incentive to keep learning and therefore constantly increase the global brainpower.
Our species is called Homo sapien which means wise man. It’s time we lived up to the name.
The final feature of time-dollars is it will be a global zero interest currency. Zero interest will apply to both savings and borrowings. Debt slavery is defined as a person’s pledge of labour as security for the repayment for a debt. Interest creates debt and debt creates debt slaves. How many people in the world today are ‘debt slaves’, a slave to money trapped in a prison of debt?
Firstly, there has been virtually zero interest on savings for the last decade – savers are losers. Someone with $1,000,000 savings in 1970 could expect to live comfortably off the annual interest of $200,000 Today, savings of $1m would earn less than $10,000 interest – 20 times less. While there is virtually no interest on savings – there is plenty of interest on borrowings. There is a huge and ever-increasing chasm between the interest rate on savings and borrowings. Banks are the big winners in this scenario.
A little-known historical truth is that the American war of independence was largely sparked by the refusal of the British crown to allow the Americans to continue using their system of ‘honest money.’ It was an interest-free currency that was creating tremendous prosperity. In the past, interest was used as a reward for lenders for risking their capital. This is fair enough, after all the lender risked the loss of some or all their money so interest was seen as the rent on money. This implies a scarcity of money. However, there is no scarcity of money, there is merely a scarcity of imagination. Money is a form of measurement and saying humanity could run out of money is as ignorant as saying we could run out of inches.
To have an abundant advanced civilisation we need an abundant advanced currency – not a currency that was largely designed in the Dark ages. Interest corrupts money and creates a poverty trap. While western countries such as the US and UK can borrow at will and have huge deficits, many countries are simply unable to borrow at sustainable levels. This double standard creates a poverty trap that keeps these countries down. But it doesn’t need to be this way.
Using time dollars each and every country in the world could create money at 0%. This would be in the form of perpetual time dollar bonds. Today governments borrow using fixed term bonds – usually 10-, 20- or 30-year treasury bonds which have to be repaid or refinanced upon expiry. Perpetual bonds are different – they have no expiry date and are like a timeless banknote that never expires.
In order to maintain integrity in this system the world’s governments would need to agree to a maximum borrowing limit – perhaps 1000% of GDP. This provides huge scope for global wealth creation (under the current money system 130% of GDP is considered the maximum) and incentivises each and every country to constantly and sustainably grow their economy.
The current system is like a ship with a major leak. Most developed countries are drowning in oceans of debt. Like it or not this debt keeps on growing and will never be repaid, just refinanced. The ability to refinance these debt mountains with 0% time dollar bonds will solve an enormous problem for the governments of the western world and usher in enormous prosperity. Access to 0% bonds will also spark enormous prosperity in less developed countries.
With the ability to borrow from the ‘Supreme World Bank’ at 0%, less-developed countries will finally be able to invest the billions needed in infrastructure, education, housing etc that they so badly need. Many of these countries have huge natural resources that can be harnessed with the proper infrastructure in place. The greatest natural resource of all these economies – the untapped brainpower of its poorly educated citizens – can be properly harnessed for the benefit of all. As emerging economies become more prosperous global demand will increase, innovation will accelerate and every nation on earth will be able to provide an ever-increasing quality of life to their citizens. Long-term projects for the benefit of all humanity could be financed.
Imagine a world where the continent of Africa could raise the money needed to build seawater conversion plants that could irrigate billions of acres of barren farmland. Imagine a global society where the Egyptian government could easily finance the restoration of the pyramids to their former glory for the benefit of all humanity and generations not yet born. Countries will be able to finance their economies at zero percent interest from a supreme global central bank who manage time dollars for all humanity and who are answerable to a citizens assembly. Individuals and businesses will also enjoy zero interest rates which will be backed by a credit guarantee scheme overseen by the global central bank. A global lending marketplace will create global competition for business and while banks can still earn handsome profits from ‘loan setup fees’ and ‘banking charges,’ charging interest on loans will be off limits.
In the same way that not everyone on the planet is willing to pay the price it takes to win an Olympic gold there will always be rich and poor. This is because some people simply don’t value money as much as others and are not willing to pay the price it takes to get rich. That is perfectly fine however with this system everyone on the planet has the opportunity to live with dignity and enjoy a quality of life that our ancestors could only have dreamed of.
The safety net that time dollars provides is not the same as giving people free money which is a recipe for long term disaster. Instead give people security, hope and opportunity. It also forces people to take responsibility and there is a dignity in being a ‘student’ that is not found by most when on social welfare. For those who wish to learn but don’t need the money it can easily be donated to a worthy cause – the ‘paid to learn’ feature is optional and available to all.
Money is merely a manmade tool that needs improvement. With this system humanity can provide an ever-improving quality of life to all her children in harmony with the planet. An advanced civilisation would have an advanced form of money like this. What will humanity achieve when money is no longer an object?
Anthony Woods is an international speaker, author and entrepreneur. His teaching style is a blend of simple ,
practical skills and inspirational stories. Anthony started his first business in a dusty attic with just one phone, no money and a dream. He grew it 2,100% during an unforgiving recession. In 2017 he was a European Entrepreneur of the Year Finalist.
Anthony’s mission is to build the World’s Best University – a centre of excellence that pushes the human race forward. Log on to keystone.ie for more information.