Time Value of Money

[David Floyd]

Point?

Point being that even if you don't agree that money itself is actual wealth (which to a degree is true, because money is based on a value judgment, which again, is based on perceptions), in this reality, in this world, you can't produce goods and services (which you seem to point to as real wealth), and therefore, money is essential to wealth.

[Kidlicious]

Originally posted by David Floyd


I believe that for you personally, your definition of value is perfectly acceptable, even though I, and most others, think it's stupid. That's why my definition of value fits reality - most people hold that same perception, because most people want to make money.

I money too. It has value. It doesn't create value though.

[David Floyd]

Exactly, value is created by commonly held perceptions.

[David Floyd]

Thanks Kid

[David Floyd]

OK, I've done my bit, now I'm off to play some poker and drink beer

[Kidlicious]

Originally posted by David Floyd


Point being that even if you don't agree that money itself is actual wealth (which to a degree is true, because money is based on a value judgment, which again, is based on perceptions), in this reality, in this world, you can't produce goods and services (which you seem to point to as real wealth), and therefore, money is essential to wealth.

So what? I'm not arguing against using money.

[Flubber]

Originally posted by Kidicious


I money too. It has value. It doesn't create value though.

But the use of money creates value-- Often I can buy thins that when added to existing goods, results in a value greater than the sum of the parts

[Flip McWho]

Again. Circular argument.

I don't see where its circular? The labour is just one fraction of the everything that goes into creating a product. It has no set inherent value. It is created though the interaction of the market. What people are willing to pay and what people are willing to accept.

Also just define value then.

[Flubber]

I'm gone too-- I'm either

1.going to get to work on my To do list from the other thread OR

2. Pick a nice stock to buy in kid's honour OR

3. Directly exploit someone by using money to employ them at something-- like perhaps the neighbour girl could babysit while my wife and I engage in some frivolous consumption

[Flip McWho]

I must also depart too. Though it has been somewhat entertaining. I happen to have a 1500 word essay to write by 5pm and its now 12pm. Also I've only done 200 words. Oh well best get onto it.

[Kidlicious]

Originally posted by Moral Hazard
Define value with out a way to measure it. You can't talk about creating something if you don't tell us what it is. You obviously have a very different definition than the rest of us.

I don't really except that there is a difference between real value and speculative value. Speculative value is determined by price, but just because something has speculative value doesn't mean that the overall amount or quality of goods and services has increased. In fact the opposite is also possible.

[Flubber]

Originally posted by Flip McWho
I must also depart too. Though it has been somewhat entertaining. I happen to have a 1500 word essay to write by 5pm and its now 12pm. Also I've only done 200 words. Oh well best get onto it.

If its on deluded communist ideals, I think you could cut and paste quite a bit

[Kidlicious]

Originally posted by Flip McWho


I don't see where its circular? The labour is just one fraction of the everything that goes into creating a product. It has no set inherent value. It is created though the interaction of the market. What people are willing to pay and what people are willing to accept.

Also just define value then.

It's circular because you are stating that money creates value, because money creates value.

[Drachasor]

Money measures the value of a good to those willing to pay that amount for it. However, money is not like a yard stick, nor is a good constant. Both can fluctuate in their "worth."

If you have more and more of a good created, beyond what you had before with the same demand for it, then the cost of it goes down. This is supply and demand. It is important to note that this value doesn't necessarily coincide with how much work it takes to procure/make the item, as there are some things people simply don't want, and other things that people really do want. As such some things simply aren't worth making, even if they do require a lot of time and energy.

Money isn't immune to this either. Right now most countries are not on a gold standard, instead they are on the "full faith and credit" standard, basically meaning a unit of money has value because the nation that issued it backs it up, controls the supply of it, etc. So the value of money relative to goods and services can fluctuate too.

Now, both of these things together give you the time value of money. If you properly invest in something today with your money, and the economy works in your way, then your money can be worth more in the future. For instance, if you invest 10 dollars into a work venture making potatoes today, and over the next few works a lot of potatoes are destroyed or the demand for potatoes goes up, then the value of those potatoes you invested in will go up. Let's say you would have broken even if the value of potatoes stayed the same, then your 10 dollar investment will be worth more proportionally to the change of value in those potatoes (if potatoes double in price, then you will have 20 dollars, 10 dollars of profit).

Investing money has become efficient enough so that you don't have to seek out the potato farmer directly though, you can instead invest via the stock market. You can even invest in the government with bonds. As long as the value of your investment increases at a rate greater than inflation (the value change of money), then you will make money.

Make sense?

-Drachasor

[Flip McWho]

If its on deluded communist ideals, I think you could cut and paste quite a bit

A pity it isn't. It's on the conflict in Northern Ireland and I'm basically examining that in three main sections; causes, parties involved and resolution.

It's circular because you are stating that money creates value, because money creates value.

Ok final point then I must do my essay. Money creates the speculative value. But labour does not hold any inherent value within itself. Which you are tending to ignore.