Wednesday
“Time-preference is simply the desire to own goods at an earlier date rather than later.” (here)
I come across this regularly, and it is important to understand that this is just an observation that is sometimes true, but, equally as often, is not. Imagine receiving a crane delivery of a roof for a house before the walls are constructed. What would be valuable when the walls are erected would have a negative value in the present. If you are hungry, then a roast dinner is needed now. If you are not hungry, then delivery would cause its value to tumble. It would either spoil, or at least go cold. Myriad other examples easily come to mind of goods which are urgently required not now, but in the future – i.e. whose value is greater in the future than it is now.
Of more significance, is that over and above the desire to consume goods now is the urge to delay consumption in order to have the means of purchasing goods, generally as yet unknown, in the future. That is the nature of capital accumulation and the means of survival, not just in the present, but into the future. Most people can scratch together enough for the present; those same humans lust to become wealthy and will, sometimes, put up with great hardships and deprivations in the present in order to attain the means of buying goods, albeit unknown, in the future.
That is why Gold is so unique; it is the only vehicle that is guaranteed to transport a stable value from the present into the future.
Immediate survival is assured by being able to eat in the present. Long-term survival is guaranteed not by consumption, but by transferring wealth from the present into the future. Only Gold can to do this. That is why Gold is money. It is not money because it can be used to exchange for goods in the present. Any number of trade goods can fit that bill.
When something can transport a known and stable value into the future forever, then it is money. And what is the only thing that can transport a known and stable value forever? Gold. That is why the emergence of Gold into the marketplace c1500BC produced the first golden age and ushered in the modern world. Accumulation of value was the game-changer – the understanding that wealth derived from the accumulation of a store of stable value was preferable to subsistence living.
I clearly explained the above in Dawn of Gold, but did not explicitly state that time preference is an occasional truth, not a law of economics. Now I do, and the reason I do is because I believe that it contributes to the obscuration of why Gold is the one and only money – and why our civilization is currently collapsing.
Time preference does sometimes apply, but it is far more important to understand when and why it does not apply.