Money has no value. Only time has
Finance does two things. It provides a market place that allows people and organisations to trade both in real goods and services and in their exposure to real risks and opportunities. We call this distribution. Secondly it is a ledger that accounts for all transactions between people and organisations within an economy. We call this registration. Finance is humanity’s tool to enable efficient cooperation in maintaining and growing their economies. Finance does not create value itself; it is a zero-sum game.
The main priorities of people are to survive and to grow (make things better). In order to survive people spend part of their time (labour) by providing services and by transforming natural resources like matter and energy into useful consumption goods. The natural resources they use do not bear any universal value, they are just there. People also aim to grow by investing another part of their time (also labour) into creating capital goods, such that they can either (1) maintain an equal level of production in the future with less labour or (2) enjoy more future consumption by working equal hours. Capital goods include knowledge, human skills and expertise, social networks and alike. The efficiency gain obtained by investing in capital goods is the only driver of real economic growth per capita and is commonly referred to as labour productivity increase.
In this line of thinking we can denote the costs of all raw materials and (semi-)finished goods (which in fact are all services) in terms of human time spent (historic costs accounting method). The value of these goods can also be denoted in terms of human time; it equals the net present value of the expected future productivity gains (labour savings) the goods will bring minus the net present value of the costs (amount of labour) that remains required to get the goods into a final useful state. This way we can separate finance from the real economy which has the benefit of analytical convenience and allows us to disregard complex financial dynamics when observing economies.
