While time backed money serves as a starting point for new wealth formation, the time arbitrage that it would represent, leaves no residual obligation in terms of other resource capacity or taxation. This is why mutually compensated time would make new wealth formation possible. Economic activity which is backed by matched time sets, would not have to "lay claim" to other resource capacity or taxation obligations. Even though skills would not be rewarded based on merit, skills capacity would not face arbitrary or rival competitive limitations. Hence local group coordination processes would allow cumulative knowledge gains to be measured and recorded over time.
One advantage of time backed money, is that it would be utilized through investment settings capable of building wealth capacity, without need of loan formation. Human capital as mutually coordinated, would serve as a valid point of entry into larger economic systems. This process would make it easier to determine how monetary flows evolve between changing aspects of resource use and the individuals involved. Presently, too much of central banking is structured around what should be an end point of wealth generation - instead of a beginning point: housing. Consider how banking has changed since its early days in the U.S. for instance. From "The Great Tax Wars", page 12:
Before the Civil War, the United States was populated primarily east of Kansas and on the Pacific coast. It was dominated by small business and farmers dependent on staples and manufactured goods from abroad. Americans kept their investments in their communities and they used local currencies issued by their own banks. Thousands of different paper currencies, some issued by banks and some simply bogus, circulated as money among Americans. The national government was tiny with little power to oversee this chaos. The national government delivered the mail, collected tariffs and oversaw foreign affairs but did little else.This book passage stayed in my mind long after an initial reading, as I reflected on the disparate economic processes governments gradually assumed on "behalf" of their populations. As governments centralized financial endeavor, redistribution and changes in production patterns, some coordination at local levels was lost - with little to replace it.
However, the bigger concern was the degree to which (government represented) non tradable sector activity became reliant on the continuing gains of tradable sectors. This has meant increasing budget problems locally, and less ability to maintain employment levels where economies are insufficiently complex. As growth in tradable sectors continues to slow, local economies now need to approach their non tradable sectors through more innovative and inclusive means. Time backed money - in particular to support local services coordination - would be one way to begin the process.
There are many contenders for economic endeavor which cannot readily be backed by existing resource capacity. Only consider the fact that more investment is needed, and yet the terms on which investment tends to be defined, prevents the participation of many who are in greatest need of investment opportunity. Broader investment patterns would go a long way to alleviate the uncertainty which now exists, regarding aggregate investment potential. Time backed money would provide means to back human capital, time value and resource use at the margins. In turn this would make it possible to make room for valuable knowledge use and services options, without making too many demands on budgets which represent already existing resource capacity.