Worth is established merely by being trade-able.
Credit is not concrete, it is merely agreed on. In any trade you essentially agree that the value is fair.
The simple example is bitcoins. They exist in a closed system and they require a specific amount of effort to acquire. Essentially we have a very limited version of other currencies - in which there is a fluctuating amount of currency, and jobs are performed to acquire currency.
Bit coins are inflated when more people join the mining, thus making it more competitive and harder to acquire coins. Additionally the more people that trade in bit coins inflate the value further merely because there is a higher proportion of users per coin.
Mid '11 a lot of people heard about bitcoins and jumped in, buying hardware to support mining, and because of the massive influx of users the value inflated to more than tripple it's previous value. This level was artificial, it was merely perceived that they were worth three times their value, and after the value crashed it settled to around 50% more than the original value.
bitcoins are probably a good platform for studying currency dynamics because the system is closed and limited. Effects of new trades, security breaches, mining influxes, technology improvements can be seen plainly.
Credit is not concrete, it is merely agreed on. In any trade you essentially agree that the value is fair.
The simple example is bitcoins. They exist in a closed system and they require a specific amount of effort to acquire. Essentially we have a very limited version of other currencies - in which there is a fluctuating amount of currency, and jobs are performed to acquire currency.
Bit coins are inflated when more people join the mining, thus making it more competitive and harder to acquire coins. Additionally the more people that trade in bit coins inflate the value further merely because there is a higher proportion of users per coin.
Mid '11 a lot of people heard about bitcoins and jumped in, buying hardware to support mining, and because of the massive influx of users the value inflated to more than tripple it's previous value. This level was artificial, it was merely perceived that they were worth three times their value, and after the value crashed it settled to around 50% more than the original value.
bitcoins are probably a good platform for studying currency dynamics because the system is closed and limited. Effects of new trades, security breaches, mining influxes, technology improvements can be seen plainly.
Last edited by ImmortalCow; Feb 28, 2013 at 05:38 PM.
You're looking at it from a purely economic standpoint. If people were robots who measured based purely on quantitative principles, then yes I could agree with you. But humans are capable of being swayed by the dumbest things. As I mentioned before, currency in general has the ability to change the value of an object. The same object, sold at different prices, has a different perceived worth, despite being identical except with price. The fact that somebody priced the object higher gives it more worth, as people perceive that something selling for more must be worth more, even if they are the same.
However, whether fiat currency has a specific influence that standard currencies don't have is something I'm not sure, nor arguing about.
However, whether fiat currency has a specific influence that standard currencies don't have is something I'm not sure, nor arguing about.
nyan :3
Youtube Channel i sometimes post videos of other games
Youtube Channel i sometimes post videos of other games
Originally Posted by Oracle
You're looking at it from a purely economic standpoint. If people were robots who measured based purely on quantitative principles, then yes I could agree with you. But humans are capable of being swayed by the dumbest things. As I mentioned before, currency in general has the ability to change the value of an object. The same object, sold at different prices, has a different perceived worth, despite being identical except with price. The fact that somebody priced the object higher gives it more worth, as people perceive that something selling for more must be worth more, even if they are the same.
However, whether fiat currency has a specific influence that standard currencies don't have is something I'm not sure, nor arguing about.
I think this is true, because people do usually think that higher price means better quality if that is what I think you mean.
Originally Posted by Oracle
You're looking at it from a purely economic standpoint. If people were robots who measured based purely on quantitative principles, then yes I could agree with you. But humans are capable of being swayed by the dumbest things. As I mentioned before, currency in general has the ability to change the value of an object. The same object, sold at different prices, has a different perceived worth, despite being identical except with price. The fact that somebody priced the object higher gives it more worth, as people perceive that something selling for more must be worth more, even if they are the same.
Yes, it works both ways.
If it is priced at X, people will expect it to be worth around X. If people think something is worth X, then people will pay around X.
By the way, this works with all things, it's called the "anchoring bias". An example:
Do you think the population of Uzbekistan is more or less than 12 million?
the answer
The classic example (economics related) is when you see something in a shop, and you walk in and check the price; "wow $1000 hell no" and then the salesman comes up to you and says "actually that is on sale, it's only $400!". In your mind you think "holyfuck that's like $600 saving, I can get this $1000 worth of thing for only $400!!!". In reality it was made in a Chinese factory for a dime a dozen.
> economics from an economic standpoint
> economics from a psychological standpoint
Last edited by ImmortalCow; Mar 1, 2013 at 09:28 AM.
I'm sorry to disturb that economics related discussion, but that makes no sense to me. In my ears it sounds like technical giberish to justify/explain some absurd concepts human mind created under the influence of abstract auto-suggested needs we developped in a society disconnected from reality. (pheww)
It's like a valueception... "Actual worthwhile material" being a totally arguable matter if you talk about gold/silver. I read, "does something with a fictionnal value could substantially impact the value of something with fictionnal value?"
Tho, fiat currency does have an impact on things. It has impacted a few decades of our evolution on a social/cultural point of view on the world scale; and therefore our way of percieving our surrounding and ourselves. That wasn't very brilliant when money was based on the rarity of precious metal, but it being based on thin air made it worst.
"Thin air" because in a system in which overproduction of unnecessary products is the key to a "sane" economy, the promise of work/goods is totally abstract from a natural p.o.v ; since it does not respond to Human's needs but to Economy's needs.
Because if Economy was created to help human society to work in the first place, it's now the other way around; we're living our lives under the dictatorship of Economy.
The establishement of a naturally abstract concept (money) as the fuel of our civilization made things absurd. We're at the point everything can be valued through that abstract concept : a 90min movie in a Parisian cinema is "as valuable as" 2 weeks of food in some poor country, some people buy shoes "as valuable as" someone else's monthly rent, or the simple facts that the lives of some people are valued a certain amount of money by some others (I'm not talking about hitmans, but banks and insurance companies for exemple).
All of this made us "human ressources".
We're at the point where any life changing decisions (I mean on a huge social scale) happens only if someone can answer yes to the question "Can I make profit out of it?"
We're at the point where principles of being a social specy (i.e improving our lives by sharing knowledges, techniques, goods, ideas...) as been replaced by its opposite : accumulation of wealth and goods.
And the technological improvements aspect is bullshit, we basically developpe technology to answer problems or answer our insatiable curiosity, not to make profit. The wheel hasn't been invented to buy a pool. We can't know where we would be technologically speaking if we evolved without money as a huge factor of our lives, It might even have slowed us down at some point : free clean energy is unwanted by people who make profit out of fossil energy, and being already rich and powerful, they're keeping different technologies from evolving etc...
tl;dr : If you were about to die of thrist, would a ton of gold be more valuable than a galon of water ?
Sorry I went outside the original subject, but money and "value of things" freak me the fuck out. It makes people stupid, and I havent slept yet.
Do you think that the use of a Fiat Currency [(money that's only worth what people believe it to be)] could substantially impact the value of actual worthwhile material?
It's like a valueception... "Actual worthwhile material" being a totally arguable matter if you talk about gold/silver. I read, "does something with a fictionnal value could substantially impact the value of something with fictionnal value?"
Tho, fiat currency does have an impact on things. It has impacted a few decades of our evolution on a social/cultural point of view on the world scale; and therefore our way of percieving our surrounding and ourselves. That wasn't very brilliant when money was based on the rarity of precious metal, but it being based on thin air made it worst.
"Thin air" because in a system in which overproduction of unnecessary products is the key to a "sane" economy, the promise of work/goods is totally abstract from a natural p.o.v ; since it does not respond to Human's needs but to Economy's needs.
Because if Economy was created to help human society to work in the first place, it's now the other way around; we're living our lives under the dictatorship of Economy.
The establishement of a naturally abstract concept (money) as the fuel of our civilization made things absurd. We're at the point everything can be valued through that abstract concept : a 90min movie in a Parisian cinema is "as valuable as" 2 weeks of food in some poor country, some people buy shoes "as valuable as" someone else's monthly rent, or the simple facts that the lives of some people are valued a certain amount of money by some others (I'm not talking about hitmans, but banks and insurance companies for exemple).
All of this made us "human ressources".
We're at the point where any life changing decisions (I mean on a huge social scale) happens only if someone can answer yes to the question "Can I make profit out of it?"
We're at the point where principles of being a social specy (i.e improving our lives by sharing knowledges, techniques, goods, ideas...) as been replaced by its opposite : accumulation of wealth and goods.
And the technological improvements aspect is bullshit, we basically developpe technology to answer problems or answer our insatiable curiosity, not to make profit. The wheel hasn't been invented to buy a pool. We can't know where we would be technologically speaking if we evolved without money as a huge factor of our lives, It might even have slowed us down at some point : free clean energy is unwanted by people who make profit out of fossil energy, and being already rich and powerful, they're keeping different technologies from evolving etc...
tl;dr : If you were about to die of thrist, would a ton of gold be more valuable than a galon of water ?
Sorry I went outside the original subject, but money and "value of things" freak me the fuck out. It makes people stupid, and I havent slept yet.
Last edited by deprav; Mar 19, 2013 at 10:52 AM.
