Let’s Talk About This Concept Called ‘VALUE’! What is ‘Value’?

January 2, 2018

The Millennial generation (those in the 19-34 age bracket) desire to change our monetary system so that a decentralized system emerges. Cryptocurrencies are their attempt for inventing this decentralized marketplace. I fully agree with the general ‘intentions’ of these millennials. But do these folks understand what they are proposing? I, personally, don’t think so. What we need to understand is this inner concept called ‘Value’ and why this concept is key to all money proxies. Let’s think on this concept for a few minutes!

Today, I read in the WSJ that a cryptocurrency called Ripple (XRP) has increased in ‘Value’ some 30,000% this past year. What a change! In fact this virtual unit increased 50% in ‘Value’ in one day. Why these huge changes in ‘Value’ for a money unit which is merely an ‘imaginary’ image in our computer screen? Let’s think on this! What our millennials do not understand about money is that ‘Value’ (money is a proxy for this concept) is extremely subjective and fluid. In reality, there is no such ‘thing’ as VALUE in our space/time universe. Value is an ‘inner’ concept of my consciousness!

So how should we understand this concept called ‘Value’? I have been a professional valuation expert for the past 50 years. I have worked with this concept and I think I understand this concept. First of all, we need to understand that MONEY was initially invented to solve the subjectivity of this concept called ‘Value’. Prior to any money within our markets we had people, then production of wealth, and then barter of what was produced. Barter is also called an exchange of ‘Value’. Value is our ‘inner’ subjective concept which emerges from the exchange of our production.

But how do we stabilize this subjective concept of ‘Value’ as we barter our products? Think on this for a few minutes! Should an item of production (say bread) exchange and/or change in price by 30,000% in one year (or 50% in one day)? Is this good for the marketplace of commerce? I don’t think so! We need to exchange our production so that prices are somewhat stable over time. We need to discover some item/commodity/thing which helps us to ‘stabilize’ this ‘inner’ subjective concept called ‘Value’. How do we do this? Let’s think on this!

What we do is invent some commodity (from or within the barter community) which can serve as a substitute (proxy) for our subjective (inner) concept called ‘Value’. We ask our barter neighbors what commodity or item or thing might work as this substitute (proxy). In time, some item is chosen (say a silver coin of 1 ounce) and this gets defined as our currency unit of ‘Value’. We can now call this unit (this ‘thing’) by a ‘name’ (say) Dollar. What has happened as a result of these decisions within our barter community? What has been ‘invented’ to help us ‘stabilize’ this inner concept called ‘Value?

What has happened is that we have ‘invented’ MONEY (say silver) and we have further defined a specific weight of Ag (silver) to serve as a counting unit for further ‘valuations’. This accounting unit (say we call it ‘dollar’) allows all of us to use our new ‘invention’ for determining prices (measuring value) within our barter community. In other words we can now watch ‘price discovery’ for all our products as people ‘negotiate’ values for the various items of exchange. All items of commerce can now be ‘valued’ (measured) with some stability. Can you discern what has happened?

This concept called ‘Value’ is at the core of exchange and commerce. Today, we live in a global village of commerce. If nations are to exchange among themselves, then these nations need a STABLE unit for ‘valuation’ of their production. Can an imaginary unit (like a cryptocurrency) work as a STABLE unit for valuation? I would suggest, absolutely not. Why? First of all, the unit is ‘imaginary’. The unit does not EXIST as something outside my consciousness. The unit lives in ‘cyberspace’ (my computer screen) not within observable space/time. How can this create ‘stability’ in prices and valuations for our marketplace of production?

It is not possible to create a ‘stable’ money unit when the unit does not technically EXIST outside my  mind. Think on this for a few minutes. Does a cryptocurrency, like Bitcoin, EXIST (independent) from my mind (what is this space called ‘cyberspace’)? Where is this space called ‘cyberspace’? Is it outside my mind or does it work as an inner unit within my ‘consciousness’ (my extended ‘consciousness’)? Think about this concept called ‘cyberspace’ and the imaginary images, text, and numbers which we circulate through ‘cyberspace’? How can a cyber unit serve as a stable money item for commerce?

What we need to recognize is that illusions of our ‘mind’ (cryptocurrencies) cannot work as stable money units for ‘valuations’. Our wealth (also called production) cannot be ‘valued’ with any degree of objectivity (stability) using an ‘imaginary’ unit as our proxy for ‘Value’. We need some item from observable ‘nature’ (like silver or gold or similar) if we want our money unit to have some semblance of stability. Think on this concept called ‘Value’ to discern the above logic. All these cryptocurrencies CAN NOT work as a decentralized money for international commerce. The units are ‘imaginary’ (subjective)!

The history of money and value reveals that MONEY (to work as a medium, store, standard, and accounting unit) needs to be relatively objective. It must EXIST outside my mind (my imagination). It must exist outside of ‘cyberspace’. Silver coins and gold coins did work do a degree in our past. Why? But the real issue for our millennials is to understand this subjective concept called VALUE. VALUE is core to money and exchange. VALUE is the foundational concept of international exchange. Think on this! I am: https://kingdomecon.wordpress.com.

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Man has had the ability to separate silver from lead for as far back as 4000 B.C.