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Think ‘VALUE’ first – then Price! Why?

June 28, 2013

The concept of Value is a deeply felt psychological emotion. An example of emotion in the setting of ‘value’ is the sale of Michael Jackson’s white glove. The shimmering, white glove Michael Jackson wore when he premiered his trademark moonwalk dance in 1983 was auctioned off for $350,000. How can an item from nature command this huge ‘price’? I would suggest that we witness similar ‘prices’ for many products and artifacts today. This demonstrates how deeply people feel about the concept of Value.

This white glove sold for $350,000 at auction. So what does this reveal about the concept of VALUE? Could we witness a Gold Coin (say 480 grains of Au) selling for $5,000 down the road? I think so! Value is psychological! Prices, today, reveal the ‘imaginary’ nature of our money units!

 

Dollar prices today are derived, often manipulated, often created from computer algorithms, and mostly subjective and psychological. Most of us view a silver or gold coin (as a ‘store’ of value) for the difficult transition period which is emerging. Prices of these coins, however, can fluctuate with the manipulation strategies of traders and other speculators who have a desire to make a quick profit within their computer screen. Prices often misrepresent real underlying VALUE. We see this clearly in the silver/gold markets today. This means that we need to THINK about ‘value’ when we purchase an alternative asset (say physical metals and/or mining stocks) and hold our positions as the ‘prices’ change and fluctuate in real-time.

This inverted pyramid demonstrates why GOLD is the foundation as our ‘store’ of VALUE! Gold could reach historic levels in terms of our imaginary dollar in the near future. I sense $5,000 an ounce or more!

Let’s take the time to understand additional meanings about the concept of Value. This concept (value) is foundational to economics and money and is much more important than Price. The concept (Value) has changed in meaning over the years primarily because our currency unit keeps changing and becoming more meaningless. From our Founding as a Nation (1776) up until 1973 our official currency unit (the dollar) had a materialistic foundation and this gave this unit special meaning in the MIND”S of traders, investors, and the general public. The ‘name’ Dollar described some THING (from Nature) which people viewed as having objective VALUE. This is now history as today’s currency units are imaginary numbers!

Basically, from 1792 to 1973, Americans viewed our currency unit as equivalent to its backing (i.e., grains of silver and/or gold). The ‘name’ Dollar was officially defined in terms of either silver (1792-1834) or gold (1834-1973). The perception was that our Dollar contained VALUE. People in the marketplace viewed silver coins (with 371.25 grains of silver) as our reference point for VALUE. With a currency unit that contained VALUE, we now could PRICE other goods and products with this unit. Prices emerged in the marketplace as people exchanged, traded, speculated, and invested via their currency units. All this seemed relatively objective, stable, logical, and sound during most of our history. Prices emerged from the psychology of the people and they negotiated VALUE via their trades and exchanges with a sound currency unit. The functions of money were being honored.

Prices often get distorted and manipulated as traders and speculators execute their computer algorithms in real-time! Sometimes, prices do not reflect fundamental ‘supply’ and ‘demand’. This results from the use of ‘imaginary’ currency units and also the manipulations of our Centralized Authorities (the Fed).

Furthermore, the purpose of any currency unit (also called a money unit) is to serve as a ‘tool’ for VALUATION of other assets, goods, and services. Value is what we create when we work in the field and produce a good, product, or meaningful service. Value is what we want to denominate via our official currency unit when we buy, sell, barter, or lend. If I built a house on a site and then desire to sell this house, I want to receive VALUE (usually in the form of official currency units). If I do not trust the official currency unit, then I want VALUE in some alternative form (say cattle, wheat, corn, silver, etc.). VALUE is foundational to all exchanges, speculations, lending, investments, and barter transactions. Give me VALUE is the mantra of economics (under our System of Capitalism).

Adam Smith in the Wealth of Nations (1776) demonstrated that real WEALTH consists of products derived from our land and our natural resources. These items, under a Capitalistic System, are viewed as products of VALUE. To determine the VALUE of any product it helps to have a sound, trustworthy, and stable CURRENCY UNIT. Currency units are used in the marketplace to denominate VALUE. The result of any Valuation (say of a house/site) is a PRICE (which is supposed to represent VALUE). Price and Value are often confused as if they are ‘one and the same’. In reality, however, Price is supposed to be a sound estimate of Value. The goal of Price Discovery is to create a conclusion of VALUE (for a given item or product). What is our problem today, however? Why are Prices distorted and manipulated?

A commodity like silver (which exists as weight, say 1 ounce), creates market PRICES which fluctuate irrationally. Why? The reason is our interconnected global (machine driven) trading markets. Traders can execute a ‘naked short sale’ for minutes to drive the price down in real-time. Later the spot fixing committee uses this change to ‘fix’ the price of silver. This demonstrates the corrupt system which has evolved. Our imaginary (digital) money units are the problem!

Prior to Adam Smith and the Wealth of Nations, the goal of economics was to accumulate bullion (both gold and silver). This was called Mercantilism. Since our founding (1776) our goal has been the production of material goods. Wealth has been viewed as material products created and/or produced from our natural resources! Thanks to Adam Smith and others!

Today, we have an UNSOUND and IMAGINARY currency unit (our official legal tender unit)  which we still call our Dollar. Today’s currency unit is created ‘out of thin air’ (also called ‘out of nothing’) and then becomes a bit/byte (also called a digit) within our computer screen. This unit is much different from the Silver Coin or Gold Coin which circulated as our Constitutional money… and which also served as backing for our Paper Dollar (1792 – 1971).  Today’s currency unit has evolved into an IMAGINARY unit (a unit of our Consciousness) and this unit is created with unsound principles via a centralized monetary Authority (the Fed). This unsound unit enters the marketplace in very deceptive ways. One of the unsound ways is what we now call QE (quantitative easing and/or official counterfeiting). What else to we need to understand?

This unit (today’s digital dollar) also flows within our computer screens as the Reserve Currency for the Planet. We now have Dollars flowing as bits/bytes within an interconnected global computer driven marketplace. Trillions of these units (appearing as ‘numbers’ within our computer screen) FLOW…(they are now units of information) from computer to computer and electronic device to electronic device. All our PRICES are now established within our computer screens and via electronic transactions, mathematical algorithms, trading strategies, and official banking manipulations. What a change from the old days when we used physical paper notes and metal coins for our Price Discovery and/or estimate of VALUE. What has this new non-system created with respect to our Prices?

Money is created via the computer. Money circulates via the computer. Money is stored within the computer. We now live within a global interconnected (electronically driven) financial market. Digits (bits/bytes) are our money units. Prices emerge from our global trading!

The reason that we now have serious Price Distortions for so many goods, services, commodities, and derivative products is because our currency units today are IMAGINARY (mostly within our Consciousness). Today’s units are immaterial, non-physical, and virtual in nature. Virtual reality has replaced our historic – Material reality. Today’s immaterial/virtual money unit can not create stable, sound, or logical PRICES as it is subjective and psychological (created ex nihilo). We now witness this factor as we watch the Price Suppression within our Silver and Gold markets. Computer programs are mostly driving our Prices for Silver and Gold (up and down). Unique shorting strategies (and algorithmic strategies) are creating Prices that do not represent the general psychological VALUE that people would determine without these manipulating strategies.

The purpose of money is to represent VALUE. This purpose is not being fulfilled in our global marketplace today. Values are distorted, misrepresented, and officially manipulated by select elite Authorities and trading gimmickry. This makes sound financial decision-making impossible and eventually the entire financial system will become totally distorted and corrupt. Those who understand the above need to THINK in terms of protecting their VALUE (real tangible and physical goods) and recognize that many PRICES are not meaningful or valid (as representations of Value) going forward.

The best ‘store’ of VALUE for the next few years will be paper notes, silver/ gold bullion, silver/gold coins, and similar physical items. The digits within your computer screen could disappear in the coming Deflationary crisis which is emerging!

In short, if you want VALUE, buy the physical silver and gold coins. Ignore the manipulated PRICES currently derived from computer strategies and mathematical algorithms. Use your imaginary currency units as a ‘tool’ for survival and for real-time purchases of products that further your real-time interests. Our current centralized SYSTEM is our Problem! The Keynesian Economic Model has created many of these problems as well as our Centralized Banking System. We now need to think in terms of a transition from a broken System (our imaginary currency units) to a New System (non-Keynesianism)…down the road! Enjoy! I am:  https://kingdomecon.wordpress.com

2 Comments leave one →
  1. June 12, 2014 6:27 pm

    Hello to every one, the contents present at this
    website are in fact amazing for people experience, well,
    keep up the nice work fellows.

    Like

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