Money vs Currency. Explaining Gold.

[WilliamC]

If such a concept disputes that it is the individual that acts, then yes, its premise is fundamentally wrong.

Sigh. An emergent property does not dispute that it is the mass behavior of the individual, constituent parts that acts, but rather that there is mathematical meaning in considering the effects of that action in aggregate rather than one at a time.

Hitler did not kill a million Jews.

It was the solider who pulled the trigger that killed the person.

You want to try to stop the Hitlers - this has failed for 10,000 years - because the problem does not exist there.

It exist with the man who holds the gun and who would pull the trigger.

I really do not understand your point, and for me to speculate would be futile.

But yes you can use mathematics to model human psychology as well, and this in no way implies that individuals are not inherently responsible for their choices.

See this article for a simple model of panic reaction in human mobs.

Note, the link for some reason is huge, so in case it doesn't parse search for "Emotional Ant Based Modeling of Crowd Dynamics" by S. Banajaree.

And thank you for leading me to something I didn't know, as Robert Heinlein said "I never learned anything from a man who agrees with me".

This may be true, but to argue that this whole refutes the parts is wrong.

That is not my argument at all, rather that there are properties of the whole which simply do not exist for the parts.

Again, I do not detect much of an effort at exposition in your debate, and that combined with some barbed analogies causes me some small level of confusion as to your intent.

 

[Steven Douglas]

Calculation is per human, not via humanity or anything else.

Yes, and that is both complex and internal to each. It can also be derived from things that are strictly external - which is to say, that the market itself (read=nebulous blob of other individuals) has both direct and indirect influences on the internal value determinants in each individual. Hence, marketing - the deliberate attempt to influence value perceptions.

I feel (internal hunger), and desire (value) food (external). However, to complicate matters, I see (external) cool people eating certain types of food, so as an average person, my desire for that type of food increases (increased internal value for a particular thing derived from external stimulus). This type of food is priced higher than other food, but not too high for me, so it is worth it to me to pay the higher price to eat what cool people are eating.

It is not just that I did or did not value a thing. If nobody else valued a thing, I might or might not either.

Another example is a run on anything of otherwise normal value (a stampede toward a clearance table, a line around the block for the new gadget, a run on the bank). Not just scarcity, but a perception thereof, which can be amplified and escalated by external observation of the behavior of others.

So while I completely agree that 'the market' is ultimately nothing more than individuals making individual internal judgments, and that all value is ultimately determined by each individual - that is not to say that it is derived in vacuo. There is a very real symbiosis - a network of forcings and feedbacks which are mostly unavoidable, and too numerous to list.

 

[Black Flag]

Sigh. An emergent property does not dispute that it is the mass behavior of the individual, constituent parts that acts, but rather that there is mathematical meaning in considering the effects of that action in aggregate rather than one at a time.

Sorry, but people and human action defies mathematical calculation - I am with Mises on this!

for a simple model of panic reaction in human mobs.

To compare economic reasoning with panic mobs will certainly lead you to serious failures of economic understanding.

Yes panic exists, as do mobs. They are agents of change - they are not economic laws.

causes me some small level of confusion as to your intent.

I do not aim for confusion but to dispel it.

The best methodology of dispelling confusion is going radical (Latin: "of roots") - that is, "go to the roots" of the problem or issue.

I sense you wish to go the opposite - invoke mass and complexity in abstractions, of "mob", "society", "marketplace" - as if these things were corporeal enough to assign action.

 

[Black Flag]

Another example is a run on anything of otherwise normal value (a stampede toward a clearance table, a line around the block for the new gadget, a run on the bank). Not just scarcity, but a perception thereof, which can be amplified and escalated by external observation of the behavior of others.

A run on a clearance table, or new gadget or bank exists, not because of a mob desire, but because the existence of that object being short.
If there was more than enough supply of demand, a run would not exist.

You argue that a run exists because the mob moves - no, the run exists because of a lack of goods.

 

[KMX]

Gold and Silver are taking a dive right now. What's the reason and when will it end? I am about to invest for my 1st time but if it keeps going down a bit I want to wait.

 

[Steven Douglas]

A run on a clearance table, or new gadget or bank exists, not because of a mob desire, but because the existence of that object being short.
If there was more than enough supply of demand, a run would not exist.

You argue that a run exists because the mob moves - no, the run exists because of a lack of goods.

Wrong. A run can exist based solely on perception of a lack, where there is no real lack.

A few years ago, in Wuxi China, Taihu lake developed a thick green algae during a particularly hot summer. It made the water undrinkable for a few days. There was a panic run on water, and stores emptied quickly. But they were promptly replenished. There was no lack of goods. Only a fear of a lack. Or that there might be.

 

[WilliamC]

Steven calculated it correctly.

Value = Desire x Object.

Since the object exists, it is moot in the equation.

What matters is the desire - if it exists, there is a value - if it does not, there is no value.

In the absence of humans there is no economics, no value, no market, no vocabulary, so there's nothing worth talking about unless you want to abstract from human to any possible sentient being, which I don't see the need for.

We seem to be stuck on the difference between a specific individual and a group of individuals who are interacting, i.e. a market.

An individual agent may desire something that has no value to other individuals. His desire may cause him to value this something, for whatever that means to him as an individual. But unless desire is able to be satisfied by the market, that is unless the agent can trade for the object of his desire, then it is meaningless to talk about market value.

If the desire can be met by the market, that is by trade with other individuals, then there is now a new value, the market value, which is based on not just the specific agent but on any and all agents who desire this same object.

Just because the original agent desires an object and places his own internal value on it does not mean that this same value is placed on it by the market. Oh the object is valuable, but exactly how it is valuable, or how much it is valuable, will depend on other circumstances.

What context is "value in the marketplace?" How is this different than a value determined by a person

The marketplace does not buy an apple. A person does. The marketplace neither buys nor sells anything, people do.

Well once you get the marketplace involved then I have to move from ideas of value to ideas of cost, which quantifies value and allows me to make comparisons between different desires.

And since individual agents have differing desires then they will assign different internal values to objects of trade, thus they may or may not be able to afford the cost of satisfying their desires at any given time depending on the market value of an object of trade that numerous agents all assign some internal value to.

If this sounds somewhat ad hoc it's because I don't pretend to be an economist by training, but am just trying to circumvent what I still somewhat suspect are semantic differences.

 

[WilliamC]

A run on a clearance table, or new gadget or bank exists, not because of a mob desire, but because the existence of that object being short.
If there was more than enough supply of demand, a run would not exist.

You argue that a run exists because the mob moves - no, the run exists because of a lack of goods.

Again, please do some reading on modeling mob psychology. It has nothing to do with trying to justify or moralize bad individual choices, but it does go a long way to explaining observable phenomena in humans.

 

[WilliamC]

Sorry, but people and human action defies mathematical calculation - I am with Mises on this!



To compare economic reasoning with panic mobs will certainly lead you to serious failures of economic understanding.

Yes panic exists, as do mobs. They are agents of change - they are not economic laws.




I do not aim for confusion but to dispel it.

The best methodology of dispelling confusion is going radical (Latin: "of roots") - that is, "go to the roots" of the problem or issue.

I sense you wish to go the opposite - invoke mass and complexity in abstractions, of "mob", "society", "marketplace" - as if these things were corporeal enough to assign action.

No, you completely misunderstand my intentions.

Just because you can use mathematics to model group human behavior does not mean that individual human behavior is capable of being calculated or predicted.

 

[WilliamC]

Gold and Silver are taking a dive right now. What's the reason and when will it end? I am about to invest for my 1st time but if it keeps going down a bit I want to wait.

As always, your strategy depends on your goals.

If you are looking to build wealth over time, buy what physical bullion you can afford now and more as you can afford it.

 

[Black Flag]

No, you completely misunderstand my intentions.

Just because you can use mathematics to model group human behavior does not mean that individual human behavior is capable of being calculated or predicted.

You can't model that either - that's the point - Keynesians have tried, and failed.

The moment you think you have a trend, humans disprove you.

 

[Black Flag]

If the desire can be met by the market, that is by trade with other individuals, then there is now a new value, the market value, which is based on not just the specific agent but on any and all agents who desire this same object.

First, no two individuals desire the same object the same way or with the same value.
Second, except in the rarest of examples, there is not a case of one object.

As I pointed out with Steven, there are more than one car, type of car, and numbers in that type of cars.

Buyers do not compete with each other - sellers compete with each other.

Thus, the concept -to me- regarding "market value" as POV from the individual imputing value as a buyer is wrought with error.

Perhaps some concept of market value maybe imputed from the seller - as he will price all units of his product to be generally the same - (ie: the price of the apple for you is the same for me) - however, that is more of convenience for the seller - and has little to do with the nature of 'value'.

 

[WilliamC]

You can't model that either - that's the point - Keynesians have tried, and failed.

The moment you think you have a trend, humans disprove you.

Well since you so casually dismiss the vast amount of research that has been done in the area I'm sure you must have a though understanding of it.

Keynesians fail because they start from a flawed premise that government spending is beneficial to the overall economy because they claim it always stimulates economic growth, not simply because it uses mathematical models.

If you think there is no evidence for the ability of mathematical models to elucidate human behavior then keep on in your narrow view.

 

[WilliamC]

First, no two individuals desire the same object the same way or with the same value.

Subjective premise, depends on how you define desire and value.

While individual desire is hard to quantify, market value is easily quantified in terms of cost or price.

Second, except in the rarest of examples, there is not a case of one object.

As I pointed out with Steven, there are more than one car, type of car, and numbers in that type of cars.

Buyers do not compete with each other - sellers compete with each other.

Not always, and since there is usually a limited supply of any class of object (make, model, year, condition of a type of car for instance) then there very well could be competition between buyers.

Heck, that's what an pretty much what an auction is, a competition between buyers to determine who values a specific object most in some commonly agreed upon units.

Thus, the concept -to me- regarding "market value" as POV from the individual imputing value as a buyer is wrought with error.

Yet many others seem to be able to impute market value for their desires by comparing their ability to pay to what others typically pay for the object of desire, assuming that information is available.

It may or may not be.

Perhaps some concept of market value maybe imputed from the seller - as he will price all units of his product to be generally the same - (ie: the price of the apple for you is the same for me) - however, that is more of convenience for the seller - and has little to do with the nature of 'value'.

Not true at all. There are often different prices for the same item to different customers.

Wholesale and retail come immediately to mind.

The market value, or perhaps cost or price is a better word, is usually easy to determine in a free market (since I explicitly mean by free market that there are laws against fraud and lying) but not always so.

 

[Steven Douglas]

Buyers do not compete with each other - sellers compete with each other.

What an absolutely strange notion. It's one I could never accept, but more than that, you have me curious at how you even arrived at such a thought.

There are very few fundamental differences between buyers and sellers. They are just traders of unlike items of value, both of them. The biggest difference is that buyers (the ones with currency) are trading with more universally valued items. But that does not mean they are not competing with other buyers.

A Chinese company offered to buy my entire inventory of a specific type of gas flow control device several years ago, one that was no longer being manufactured. I told them I couldn't do that, that I had other customers to consider, and that I would lose other kinds of business if I didn't have those items on hand as conveniences to existing customers. They doubled their offer, and I turned them down. They tripled their offer and I accepted. The other customers were out of luck - and not happy at all, as they had nowhere else to go for those items. I ended up losing some business over that exchange, and considered the whole thing zero sum when all was said and done. Furthermore, my existing customers asked why I didn't at least make them aware, so they could bid. I thought the price was so outrageous that they would turn me down anyway. No, they all would have paid triple the price. It was that scarce, and that valued.

No, buyers definitely compete with each other. Every day.

 

[Black Flag]

What an absolutely strange notion. It's one I could never accept, but more than that, you have me curious at how you even arrived at such a thought.

Already showed this.

Buyers have money and want an near-infinite variety of different things.
You and I do not compete to get those things, there is so much different stuff, and so much of the same stuff that only rarely is there a bidding war on the same thing.

If you want a can of peas and I want a can of peas, we are not competing with each other for a can of peas.

But Sellers are competing for exactly the same thing - money.

A Chinese company offered to buy my entire inventory of a specific type of gas flow control device several years ago

As I said, rarely - and even then what did the Chinese do?
They found something else - your customers and the Chinese were not competing with each other - as soon as you were unavailable, they found something else.

 

[joshnorris14]

If you really believe money has value because sheepel say so, I would like to sell you the Golden Gate Bridge.

I value FRNs, therefore FRNs are valuable.

 

[joshnorris14]

How do you figure? Meat is not scarce for Yufei now, but it was then. So how do you figure that it was scarce in both cases?

You don't know what scarcity is. I'm not going to discuss economics with someone who is ignorant of one of the basic concepts of economics. In fact, scarcity IS economics, specifically defined, economics is the study of human action under conditions of scarcity.

 

[WilliamC]

If you really believe money has value because sheepel say so, I would like to sell you the Golden Gate Bridge.

I value FRNs, therefore FRNs are valuable.

Well, actually, we are forced by law to accept FRNs as money, so the value is not 'because sheepel say so' or 'because I value them', it is because the government forces us to use them.

Remove legal tender laws and let's see how rapidly we all devalue FRNs and start using different currencies as money.

 

[WilliamC]

How do you figure? Meat is not scarce for Yufei now, but it was then. So how do you figure that it was scarce in both cases?

You don't know what scarcity is. I'm not going to discuss economics with someone who is ignorant of one of the basic concepts of economics. In fact, scarcity IS economics, specifically defined, economics is the study of human action under conditions of scarcity.

So scarcity is an unquantifiable concept?

Either something is scarce or it isn't, there is no degree of scarcity?

Because I read the sentence you are responding to as indicating a change in scarcity of meat for the individual being discussed as one of degree, not of one going from there being a limited quantity to an infinite quantity.

If scarcity means anything less than an infinite quantity then yes, meat would still be scarce for the individual being discusses.

But what then do we call differing degrees of scarcity?