Relative Profit- How timing makes profit out of non-profit
It is an old adage that "Time Is Money" but I would like to go a step further and say, "Time is Profit".
1. Say that Tom gives Tim £30 and Tim gives Tom £30. No one has profited right? They're just swapping round equal piles of cash.
2. But now say that, on Monday, Tim gives Tom £10 in exchange for £20 and on Tuesday, Tom gives Tim £10 in exchange for £20. Now it appears as if each person is making a £10 profit and yet they are still just swapping round £30.
3. And you could say that, actually, on Monday Tim does make a £10 profit and on tuesday Tom does make a £10 profit. Why?
4. Well because on Monday, Tim has more money and thus more spending power than Tom and thus, on Monday, Tim is richer than Tom but on Tuesday its Tom who has the extra money and thus extra spending power, so on Tuesday its Tom who is richer than Tim.
5. And yet, inspite of this relative profit, all that happened was two people swapped round £30.
6. If you're still not convinced, think about a similar but more commonplace situation where Tim gives a friendly loan of £30 to Tom because Tom needs £30 on that day but, because its a friendly loan, Tim doesn't expect interest when Tom repays the loan, all the same when Tom does repay the loan its on a day when Tim needs an extra £30 spending money.
7. As you can see, in this example, each person has profited because, on the day they got the £30, they needed that £30. So even though all that happened was that £30 was passed back and forth, profit occurred because, at a particular time, being £30 richer was beneficial to each person.