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What is an ‘Item’ (say my silver coin) Worth? Let’s talk!

January 27, 2014

Let’s start our thinking within a barter environment. Capitalism starts with barter. Personally, I own a house, two cars, six tennis rackets, and many silver coins. What is the ‘value’ of each item? Is there an objective answer to this question. Keep in mind that the concept of ‘value’ is the core concept of monetary economics (our form of Capitalism). Value theory basically started prior to the invention of money. An environment of barter (exchange) produced this concept. Let’s start with my recent purchase of a one ounce Silver Panda coin. What is this ‘item’ or ‘thing’ worth?

Can anyone tell me what this ‘item’ (one ounce silver coin) is WORTH? Go for it!

The various theories of ‘value’ derive from historical economists like Adam Smith, Karl Marx, and Ludwig Von Mises. Each economist had a somewhat different view on what constitutes ‘value’ within a Capitalistic system. Adam Smith and Karl Marx assumed that the cost of ‘labor’ played a key role in determining ‘value’. Ludwig Von Mises viewed ‘value’ as subjective and a result which changes from person to person. Many pundits within the Hard Asset Community (gold/silver community) tend to view my silver coin as a ‘thing’ which has intrinsic value. Others claim that only gold has intrinsic value. So what is this concept that we call ‘value’? Can anyone on this planet define this concept in objective terms?

Personally, I have worked within the valuation profession for some 45+ years. The issue of value has been my search for most of my lifetime. So what is this ‘thing’ that we call ‘value’? First of all, we probably should not speak of ‘value’ as a ‘thing’. By referring to ‘value’ as a thing we imply that it can be defined objectively. In reality, however, ‘value’ should be viewed as a ‘result’. Value derives from our negotiation in a marketplace and the ‘result’ of our subjective negotiations produces what we call ‘value’. Value is much like ‘beauty’ or ‘happiness’. These words can not be defined objectively yet they have subjective meaning to each person. So let’s think of ‘value’, ‘beauty’, and ‘happiness’ as results which happen as we think about a situation or an interpersonal transaction.

My silver Panda is a one ounce coin with some 480 grains of pure silver within the coin. Does this silver coin contain any objective ‘value’? Is ‘value’ intrinsic and/or inherent within the metal coin? Is there any possible objective means which we can use to determine the ‘value’ of this silver coin? If so, what would you propose as objective? If not, why? After some 45 years of working with the concept of ‘value’ I would propose that there is no such ‘thing’ as ‘value’ within our physical universe of matter/energy. Value can not be discovered, found, or objectively determined. So what is this concept that we call ‘value’? Could it be a ‘phantom’ of our minds? Could it be an ‘imaginary’ concept with no real existence within our physical (material) universe?

Today, we trade ‘imaginary’ currencies (also called digital currencies). These currencies are then used to create ‘values’ of collateral, assets, things, and results. When I ‘value’ my house I derive a ‘result’ within my Consciousness (mind) and then apply this mental result to the bricks and mortar (called my house). Where do I get this ‘result’ which I call ‘value’? I would propose that I (we) get this ‘result’ from our metaphysical mind (also called my/your Consciousness). The concept of ‘value’ does not really EXIST within our physical/material universe. This concept is really a ‘phantom’ concept (much like beauty, happiness, and/or the tooth fairy). We believe in this concept because we THINK that it has meaning for trading, exchanging, and negotiations. Since the majority of people in our marketplace BELIEVE in this concept of ‘value’, it does work to a degree. It will continue to work until enough BELIEVE that it is totally subjective and imaginary!

If we believe that the MOON is made of cheese, this also works for a time period. Historically, many humans (the most intelligent) believed that our Earth was ‘flat’. These intelligent beings then spread this gospel of a ‘flat’ Earth to the masses and most everyone BELIEVED that our planet was ‘flat’ (we all could fall off the planet if we walked to the edge). Beliefs are very powerful mental perceptions. Just ask your wife why she believes differently from you on a contentious issue. Are we now living in the Last Days with a Tribulation Period emerging? Who can say definitively or not? Beliefs have strong followings and beliefs can also create a reality which otherwise may not occur. What a world we live in! I love the diversity and confusion! We all ‘believe’ differently on so many issues. I discovered this reality while teaching!

So let’s conclude with MY beliefs (since this missive derives from MY inner philosophy and thinking). My sense is that we now live with a DIGITAL market and digital currencies. Our World Wide Web has created this new trading market for our planet. This market ‘values’ goods and services via ‘imaginary’ (digital) currencies which technically do not EXIST within our observable material Universe. These currencies merely ‘appear’ within our MINDS as images within our Computer Screens. In reality, we are experiencing a type of Virtual Reality within what we call CyberSpace. CyberSpace is technically an ‘extension’ of our inner Consciousness. This means that all our trading, banking, exchanging, valuing, and manipulating is SUBJECTIVE and an INNER experience of our MINDS. We now need to discover and understand our MINDS.

One alternative for discovering one’s MIND is to attempt to find, discover, or locate a concept like VALUE. Go out and look at your house (right now). Look at a Silver Coin (like my silver Panda). Can you find, discover, locate, or observe this ‘thing’ (really ‘result’) called VALUE? Would it help to look via a microscope (say an electron microscope)? Could you prove that ‘value’ exists by using a word definition for the concept? Give it a try! I have many times! What I have concluded is that ‘value’ is a PHANTOM concept of our Consciousness (which does not exist within our Space/time reality). We can BELIEVE in this concept if we desire, but that does not make it EXIST. My challenge to the reader of this missive is to try to define, locate, discover, and/or discern what this concept (which we all call ‘value) really IS!

If anyone can provide me with contrary evidence to what I have presented above, go for it! After some 45 years within the valuation profession, I have concluded that VALUE is a ‘phantom’! Think for yourself! Enjoy! I am:

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