It all seems so systematic, arranged, and orderly. Sixty seconds make a minute, 60 minutes make an hour, 24 hours make a day, and one day equals one complete rotation of the planet earth.
About every 30 days the moon orbits the earth – which is one month. And every 12 months the earth orbits the sun – which is one year.
So far so good…right?
But here’s where the nice and neat order of it all breaks down. Because if you try to measure one of earth’s orbits of the sun in days, it’s not so divinely tidy. For it takes 365 days plus an inconvenient 6 hours.
Nonetheless, we don’t let these inconvenient 6 hours hamper our perfection. We’re humans. We innovate, invent, and make the world in our image. And when the numbers don’t jive, we do what must be done – we fudge them.
We create an off balance account, we concoct a new theory, we contrive a negative amortization loan, we trade our autonomy to the dominion of central bankers…and we invent leap year.
A Day of Correction
Tomorrow’s the day the books must be reckoned. Peering into our off balance account we find 24 accrued hours that must be tallied.
Consequently, we must have a day of correction for the disorder of the last four years. We must resynchronize the calendar year with the astronomical year. And we must reground our measuring system with its baseline – its reference point. Because without it, what’s a day really measuring? It becomes nothing more than an etched line inside a cave dwellers grotto.
So goes the dollar – or any paper money – when it’s not backed by gold or some other commodity that can’t be created at will. For without a true baseline to measure value by, what’s a dollar anyway?
It’s abstract, indefinite, and arbitrary. It can be created out of thin air at the whims of the Federal Reserve. Additionally, it can expire worthless when its promissory obligation is defaulted on.
A pocket full of dollars one day and you can buy the things you want and need. On the next day…worthless.
But even if the dollar isn’t worthless – yet – its incessant variability is an incessant problem. How does one save, and invest, when the dollar’s monetary base is continuously inflated?
Reckoning Time and Money
When a carpenter measures the length of a cabinet as being 3 feet, he’s certain that the length measured as 3 feet will always be 3 feet. To the contrary, when a shopkeeper prices a 24-ounce loaf of bread at $3.29, he’s not certain that the value of one loaf of bread will always be equal to $3.29. In fact, in 1971 – the year the dollar’s last tie with gold was severed – he would’ve valued three 20-ounce loaves of bread equal to $0.89.
Has the usefulness of a loaf of bread, on a per ounce basis, really changed 826 percent?
Certainly not. Rather, the baseline used to measure the value of a loaf of bread has changed. It’s true that prices of individual goods and services will fluctuate to account for natural changes in supply and demand, but when money is anchored to a stable baseline, overall prices will by and large be stable.
In this regard, leap year’s necessary, vital, and appropriate, for preserving the calendar year’s conformity with its baseline. So, too, today’s money needs a baseline to derive its meaning and value from.
Without such a baseline, we’ll just continue to accrue more zeros at the end of everything money measures. Yet what good’s a $100 dollar bill if it only buys you what a $1 dollar bill did before?
So enjoy your extra day. The time was there all along…it just needed to be reconciled. We have a startling suspicion that reckoning the distortions of the dollar reserve standard will not be so amiable.
for Economic Prism