Pondering imaginary money
At lunch yesterday as I walked around the industrial park with the other
engineers, we were talking about the imaginary nature of money. How it
doesn’t really exist and the whole economy just keeps going because
everyone pretends it does.
Money isn’t value. Money only has value because people want it. Things
have value, ideas have value and work has value. How that gets translated
into money, and how often the value is not really reflected in the money
was strange to all of us having the discussion.
So, I was very surprised last night to get home and hear that about 3 hours
after we had that conversation some guy typed a B instead of an M and that
was enough to drop the value of one of the country’s biggest corporations
by 50%.
One guy. One letter. Billions of dollars.
Why? Because he said he wanted to sell Billions of shares when he meant
Millions. The computers that run the economy said “if he’s selling off
Billions, it can’t be worth much!” and the price went down. The imagined
value of the company changed.
Once they sorted out the problem, the price came back because no one else
could imagine that the value was so low.
The disparity between value and money can and has been terminal.
Back in the 1930’s my grandfather was the town doctor in a little town in
northern Vermont. It was the depression. No one had money in a very
literal way. So, my grandfather would accept chickens and other trade from
the farmers who needed medical care. For a while, this worked out. My
grandfather could feed himself and family, and the folks in town got
medical care.
But, my grandfather needed an operation. It was a big enough one that it
had to be done in a hospital. The hospitals big enough would not take
chickens as payment.
My grandfather died only 3 years older then I am now. (Yes, there is a lot
more to the story, but not relevant to this discussion.)
Does that mean chickens have no value?
No. But, they didn’t have a tradable value. To use them you need a
chicken coop, chicken feed and someone to take care of the chickens and
collect the eggs.
Money requires none of those even if you can’t eat it. (And, who would
want to? It is disgusting.)
So, in many ways, chickens have more value then money under the right
conditions. But, only under those conditions.
I think a lot of the value concept is lost in the modern economy. Money is
considered value instead of a tradable medium for value. And, that can
lead to these drops in the market like yesterday because people aren’t
trading on real value, only on imaginary value. That’s why the stock came
back up so fast as there was real value there and it showed. But, the
computers don’t understand the real value concept and almost crashed the
whole system because of it.
I’ve been pondering a lot about how I add value to the system. It’s tough
when my job is to come up with ideas. How do you measure that?
A good chicken makes eggs. I you can measure the ideas and see if they
work. But, that takes a lot of other steps in the process. And, it can be
hard to say where it goes wrong if it does.
Don’t know. Hope I’ve got enough eggs that will hatch.
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