Commodity monies can be contrast with fiat monies like the modern dollar, euro, yen, etc. which function as commonly accepted media of exchange but are not used for any other non-monetary purpose. Commodities that have served as money include gold, silver, copper, and salt, among others.In most respects, fiat currency is a better approach for monetary policy than earlier commodity monies or the more recent gold standard transitions, for that matter. Why - then - doesn't fiat money adequately represent time value? Knowledge use aspects of service formation come into play, once other production patterns have grown complex in fiat systems. However - as a secondary component of production - only certain time aggregates are accounted for, in these conditions.
One could liken the missing (aggregate) time component to land which is allowed to lie fallow indefinitely. If the land were "elsewhere" (such as other resources not central to production and consumption) this would not be problematic. However, the fallow "land" in this instance, lies in the heart of what is presently utilized. To be alive is to consume, which means that personal production in some capacity is a complete necessity, regardless of existing production patterns.
While monetary redistribution - via fiat money for knowledge use - is a reasonable pattern for some time periods ("produce" remains available from other fields), problems eventually develop. How so? Some skills sets retain special privileges for services production, even as technology allows consumption aggregates to take precedence over production aggregates. This process means the "best" fields are expected to provide the services consumption bounty, for too many fields which are expected to lie fallow. When limits to knowledge use are left in place for too long, they can eventually lead to societal stratification and even caste systems. Presently, the growing inability of governments to coordinate a time and knowledge based marketplace, also means that fiat monetary systems are being questioned.
Money as presently utilized, is the only good that can be traded for all other commodities - none of which can be directly traded with each other. Fortunately, this isn't problematic for most resources, because they are already represented as complete sets of aggregate possibilities in the marketplace. This means the monetary price signals for goods other than time, are generally reliable for efficient coordination. In other words, X amount of resource Y is what is available to be quantified, measured and valued. Whereas time aggregates lost this opportunity, because portions of time Z were quantified, measured and valued in ways which didn't take total time aggregates into account. Thus the monetary pricing signal for time value is incomplete.
When public and private interests attempt to coordinate pathways for time use, a complex economy which relies on fiat monetary policy for services needs is consequently left with mixed signals. This is not just a matter of mixed signals regarding how individuals would prefer to utilize their time in relation to that of others, but also what government budgets are capable of accomplishing. By allowing time value to provide a parallel pricing function alongside money, signals would become more clear, while knowledge use and services formation could be brought back into economic balance.
One thing William Luther did not touch on in his post was the importance of money as a medium of account. Indeed, a medium of account context is what normally provides a broad framework for goods and services coordination from a national perspective. However, the medium of account as representative of broad income and consumption aggregates, works best when labor force participation is high. And fiat money systems become difficult to comprehend, when time value is not well anchored in relation to traditional production.
The changing nature of governmental responsibility in the economy, was responsible for the fiat monetary systems which evolved in the 20th century. In some respects, governmental supplementation could be sustainable, so long as the ongoing compensation for time value remains simple - such as basic retirement wages. The main problem for fiat monetary formation, is when governments attempt to compensate for differences assigned to hourly time values for services coordination. While governments have good intentions in this regard, supplementing time use variance only creates a vast degree of complexity, which consequently becomes difficult to track, measure or budget.