What best explains the time value of money? the concept is another way to explain how inflation works. it just means that it's best to have money today, so it can be put to work sooner to make even more money. this is just a banking term. it's insider jargon for compound interest. it means that, as time goes by, a dollar buys more today than it will tomorrow because of inflation. of course, in a deflationary economy the process is inverse?