http://www.thedailybell.com/1733/Economic-Dreamtime-Unravels.html
Posted by Bionic Mosquito on 2/3/2011 10:37:58 AM
"Fiat money sinks towards its intrinsic value which is zero..."
I am not sure it is appropriate to refer to any asset as having as intrinsic value. Value is subjective. There is no proper or intrinsic value for anything, only a value at which a good will trade. This value will always be subjective, based on the views held by those participating in the market. This value can change regularly, and certainly does. This is true for fiat money, just as it is for gold.
If items had a true intrinsic value, trade would inherently be a win-lose proposition, only occurring because the loser was too dumb to know better. However, in (honest) trade, both parties are winners: a win-win. I value the candy bar; the store keeper values my dollar. We both feel better off after the trade.
Same for gold. The seller of gold for currency certainly finds more value in the currency than the buyer of gold does. Value is subjective, not intrinsic.
Posted by Bionic Mosquito on 2/3/2011 1:50:14 PM
@Maritzanita
"Good luck doing anything with your "!!???intrinsically valuable???!!" pieces of paper!!!!!"
Your ignorance comes shining through in your ranting. I just got done saying nothing has intrinsic value, and you offer me good luck with my ""!!???intrinsically valuable???!!" pieces of paper!!!!!"
You ignore my point. Value is subjective. There is no such thing as intrinsic value.
That you or I might favor gold or Lady Gaga memorabilia has nothing to do with it. The fact that some people WOULD choose Lady Gaga over gold to travel through time with only proves the point. Different people value the same thing differently. Different people might prefer one item over another. The same person might value the same thing differently over time.
But you try an experiment. Go out in the desert for two years. You will see no other human being, and have no chance for rescue. You can take either a water truck or a London good bar of gold.
Which do you choose? Do you do so intrinsically or subjectively?
The quote should probably read "Fiat money sinks to the value of its cost to produce...". Every value of an object is ultimately subjective but the human labor expended to produce the object is probably the intrinsic value of the object. PHW
ReplyDelete"...but the human labor expended to produce the object is probably the intrinsic value of the object."
ReplyDeleteAs profit is not assured, this cannot be so.
More so, what is the value of the labor used to produce the fiat currency? One dollar per hour? 500 dollars per hour?
As the value of labor is also subjective, labor value cannot be used to determine product value.