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Author Topic: Should money have intrisic value ?  (Read 9489 times)
MoonShadow
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January 11, 2011, 04:49:07 AM
 #41

I've noticed that, at least in the U.S.A., the lack of intrinsic value to our is an increasing cause of concern to those of us who participate in the economy (which would be almost all of us). it concerns me personally that when (at this rate it's not an if) our economy fails my penny jar will be my only currency of value (based on commodity copper alloy prices) 

The penny is copper plated zinc, and the nickel is nickel plated steel.  There is no intrinsic value, of any significance, to any part of the US monetary system.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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Sjalq
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January 11, 2011, 11:28:03 AM
 #42

Money/currency has intrinsic value because people need and value the abilities to:

1.Trade in something that is widely accepted for almost any other good/service.
2.Highly divisible.
3.Non perishable
4.Could act as a store of value. (Though this is somewhat optional)

Even ZimDollars had intrinsic value while in use if we look at what money is useful for. Although it's relative value compared to other goods and services was in continuous decline.

BitCoin fully fulfills these requirements even adding more features and therefore has "intrinsic" value. Saying that money has no intrinsic value is an existential observation akin to saying food has no value since you will die anyway. Money is an crucial means to a desired end.

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January 11, 2011, 08:49:34 PM
 #43

Money/currency has intrinsic value because people need and value the abilities to:

1.Trade in something that is widely accepted for almost any other good/service.
2.Highly divisible.
3.Non perishable
4.Could act as a store of value. (Though this is somewhat optional)

That's not intrinsic value, that's monetary value. Very different thing.

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January 11, 2011, 09:22:06 PM
 #44

Money/currency has intrinsic value because people need and value the abilities to:

1.Trade in something that is widely accepted for almost any other good/service.
2.Highly divisible.
3.Non perishable
4.Could act as a store of value. (Though this is somewhat optional)

That's not intrinsic value, that's monetary value. Very different thing.

It is necessary for people to have a highly liquid means of trade same as it is necessary for them to sleep comfortably or have comfortable shelter. A house or a bed can then be said to have no intrinsic value but "shelter value" and "sleep value". The discussion is semantic. We need money, else trade is going to be laborious and inefficient. It is filling these needs that grants money its usefulness to us, its 'value'.

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MoonShadow
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January 11, 2011, 09:30:43 PM
 #45

Money/currency has intrinsic value because people need and value the abilities to:

1.Trade in something that is widely accepted for almost any other good/service.
2.Highly divisible.
3.Non perishable
4.Could act as a store of value. (Though this is somewhat optional)

That's not intrinsic value, that's monetary value. Very different thing.

It is necessary for people to have a highly liquid means of trade same as it is necessary for them to sleep comfortably or have comfortable shelter. A house or a bed can then be said to have no intrinsic value but "shelter value" and "sleep value". The discussion is semantic. We need money, else trade is going to be laborious and inefficient. It is filling these needs that grants money its usefulness to us, its 'value'.

"Intrinsic value" is a value beyond what the object has as a medium of exchange.  For example, a peanut farmer cannot eat all his crop (perhaps he doesn't even like peanuts), so his crop has no intrinisc value for himself.  However, he sells his products to people who, presumedly, do have a use for said peanuts.  To the farmer, the peanut crop has little or no intrinsic value, but to the general population it does.  As a result, the crop has a real market value that is independent of it's trade value (to the farmer) and independent of speculative value.  Said another way, even if peanuts were used as a medium of exchange in his twon, the farmer's crop value would not drop to zero with the introduction of a better medium of exchange, such as silver coins.  Likewise, a mattress or shelter also has a definable value outside of the context of their trade value.

Thus, a paper currency has little intrinisc value.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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January 11, 2011, 10:14:49 PM
 #46

"Intrinsic value" is a value beyond what the object has as a medium of exchange.  For example, a peanut farmer cannot eat all his crop (perhaps he doesn't even like peanuts), so his crop has no intrinisc value for himself.  However, he sells his products to people who, presumedly, do have a use for said peanuts.  To the farmer, the peanut crop has little or no intrinsic value, but to the general population it does.  As a result, the crop has a real market value that is independent of it's trade value (to the farmer) and independent of speculative value.  Said another way, even if peanuts were used as a medium of exchange in his twon, the farmer's crop value would not drop to zero with the introduction of a better medium of exchange, such as silver coins.  Likewise, a mattress or shelter also has a definable value outside of the context of their trade value.

Thus, a paper currency has little intrinisc value.

Very, very well stated.

However, I still think it is semantic, if peanuts were used as trade but also as food that could also be said to give them "alternative" value. If they were no longer money, they could still be food, but a better peanut-variety could supplant them as a desirable food source and then they'd be back to square one. Perhaps they could then be used in a bio fuel plant. The fact that a peanut is more versatile than a bitcoin and from a semantic POV has more "intrinsic value" does not make it more valuable as a currency.

Bitcoin lacks "alternative value" as something else outside maybe an experiment in cryptography. This is somewhat unimportant since all the qualities it does have makes it a pretty decent form of money.

If "alternative value" == "intrinisc value" then I'd have to answer the question "Should money have intrisic value?" with a resounding no. Both bitcoin and gold prove this.

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MoonShadow
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January 11, 2011, 10:51:29 PM
 #47

"Intrinsic value" is a value beyond what the object has as a medium of exchange.  For example, a peanut farmer cannot eat all his crop (perhaps he doesn't even like peanuts), so his crop has no intrinisc value for himself.  However, he sells his products to people who, presumedly, do have a use for said peanuts.  To the farmer, the peanut crop has little or no intrinsic value, but to the general population it does.  As a result, the crop has a real market value that is independent of it's trade value (to the farmer) and independent of speculative value.  Said another way, even if peanuts were used as a medium of exchange in his twon, the farmer's crop value would not drop to zero with the introduction of a better medium of exchange, such as silver coins.  Likewise, a mattress or shelter also has a definable value outside of the context of their trade value.

Thus, a paper currency has little intrinisc value.

Very, very well stated.

Thank you.
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The fact that a peanut is more versatile than a bitcoin and from a semantic POV has more "intrinsic value" does not make it more valuable as a currency.

I never claimed different.  The intrinsic value of a money is not additive to it's trade value.  The intrinsic value of a money functions as a 'price floor', supporting the market value of the money in times that it's trade value drops below it's intrinsic value, such as during times of war.  Bitcoin is an excellent currency, but has no value to anyone that is denied (by war, fiat, or otherwise) access to a functioning marketplace.  At least the peanuts are still food.

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Bitcoin lacks "alternative value" as something else outside maybe an experiment in cryptography. This is somewhat unimportant since all the qualities it does have makes it a pretty decent form of money.


Again, it's not simply a matter of semantics for me to correct you here, since in context we are using econimic definitions.  Bitcoin has all the qualities of a fine currency.

Quote

If "alternative value" == "intrinisc value" then I'd have to answer the question "Should money have intrisic value?" with a resounding no. Both bitcoin and gold prove this.

Bitcoin does not require intrinsic value to function well as a medium of exchange, but gold does not support your statement.  Gold has quite a bit of intrinsic value, which is one reason that it has been such a sound money for over 5000 years.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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January 12, 2011, 07:47:25 AM
 #48

Bitcoin does not require intrinsic value to function well as a medium of exchange, but gold does not support your statement.  Gold has quite a bit of intrinsic value, which is one reason that it has been such a sound money for over 5000 years.

Don't get me wrong I really like gold and silver and am in both, but honestly, if denied access to a functioning marketplace what do I use them for?

"If you see the price of gold go up beyond $2000 you might want to sell some of your gold and buy lead"
-Robert Kiyosaki

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January 12, 2011, 07:57:20 AM
 #49

Don't get me wrong I really like gold and silver and am in both, but honestly, if denied access to a functioning marketplace what do I use them for?


Electronics, decorative use, industrial application, etc.

Bitcoin? Umm.....

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January 12, 2011, 08:04:41 AM
 #50

A zerohedge article form today says intrinsic value should be 0, but gold will do as a substitute. The article pretty much describes the problem to which bitcoin is a solution.

http://www.zerohedge.com/article/guest-post-gold-improbable-answer-life-universe-and-everything
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January 12, 2011, 08:18:01 AM
 #51

A zerohedge article form today says intrinsic value should be 0, but gold will do as a substitute. The article pretty much describes the problem to which bitcoin is a solution.

http://www.zerohedge.com/article/guest-post-gold-improbable-answer-life-universe-and-everything

lol.  Indeed !

Quote
It's worth noting that digitized fiat currencies of today meet two of the three requirements 100%. If we find a way to make it hard to create, it would be a better choice than gold.

The guy is talking about bitcoin, without even knowing it Smiley
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January 12, 2011, 08:32:17 AM
 #52

People, please, stop spreading misinformation! There's no such thing as intrinsic value, this is a fallacy. A fallacy on which Marxism is based, by the way!

intrinsic (comparative more intrinsic, superlative most intrinsic)
  • innate, inherent, inseparable from the thing itself, essential
  • (of a body part, relating to anatomy) comprising, being part of a whole

Therefore, by the definition of instrinsic, and by the fact that value is subjective (it's an opinion people have on stuff, not something innate, inherent, inseparable from the thing itself), intrinsic value is a contradiction in terms.

Also, do not confuse utility with value. Water is a buzillion times more useful than gold, nevertheless gold is much more valuable.

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January 12, 2011, 08:34:35 AM
 #53

People, please, stop spreading misinformation! There's no such thing as intrinsic value, this is a fallacy. A fallacy on which Marxism is based, by the way!


But we don't believe in the intrinsic theory of value!

Intrinsic value have place in our subjective theory of value! It simply mean utility other than monetary utility. Get it?

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January 12, 2011, 08:43:01 AM
 #54

No, you're contradicting yourself. Just read again what I said.
Something cannot be a subjective opinion of the beholder and an intrinsic feature all at the same time.
And utility is not value.

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January 12, 2011, 08:50:13 AM
 #55

No, you're contradicting yourself. Just read again what I said.
Something cannot be a subjective opinion of the beholder and an intrinsic feature all at the same time.
And utility is not value.

Damned it I thought we agreed on that.  Intrinsic/Extrinsic has nothing to do with subjective/objective.


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January 12, 2011, 09:26:56 AM
 #56

If you've agreed that anything has intrinsic value then you've agreed on a fallacy.
Just understand the terms you're using, they have a meaning.
If value is on the beholder only - and it is - it can't be an inseparable attribute of valued things.

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January 12, 2011, 09:31:18 AM
 #57

If I post something here and nobody reads it... did it have value?

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January 12, 2011, 09:53:23 AM
 #58

If you've agreed that anything has intrinsic value then you've agreed on a fallacy.
Just understand the terms you're using, they have a meaning.
If value is on the beholder only - and it is - it can't be an inseparable attribute of valued things.

Come on...  Tabacco has intrinsic value.  Because many people like smoking.

If you are one of these person, then for you tabacco has value because there is an INtrinsic property INSIDE tabacco (actually probably nicotine) that you like.  Such a value doesn't rely on anything EXterior to the tabacco leaf.

Now you consider a $100 bank note.  It has some value, due to the fact that many people will do some stuffs to have some.  Those people are OUTSIDE of the bank note.  Thus this value is EXtrinsic.

So to sum up, whether a money should have or not intrinsic value depends on whether or not you might desire it for itself, if you were alone on a desert island, for instance.

The fact that value is subjective has nothing to do with this.  It's *orthogonal*.
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January 12, 2011, 10:35:18 AM
 #59

Come on...  Tabacco has intrinsic value.  Because many people like smoking.

If you are one of these person, then for you tabacco has value because there is an INtrinsic property INSIDE tabacco (actually probably nicotine) that you like.  Such a value doesn't rely on anything EXterior to the tabacco leaf.

The value of tobacco is not an intrinsic property of it. The intrinsic properties it has that make it useful for smokers are not its value, nor determine it. Previous belief that value was an attribute of stuff led to serious economic misunderstandings - and it does until today. That's why I'm being pedantic and asking you people not to spread this mistake. "Come on", it's not that difficult Wink

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January 12, 2011, 10:43:24 AM
 #60

The value of tobacco is not an intrinsic property of it. The intrinsic properties it has that make it useful for smokers are not its value, nor determine it. Previous belief that value was an attribute of stuff led to serious economic misunderstandings - and it does until today. That's why I'm being pedantic and asking you people not to spread this mistake. "Come on", it's not that difficult Wink

Well, I'm pretty sure that if you remove nicotine from tabacco, people would enjoy it much less.

I don't see what misunderstandings you are talking about.  Some people believe in objective theory of value, if that's what you mean.  But almost no one here does, I think.  It's a completely different matter.

The point is, even in a subjective theory of value, the question of the intrinsic value of money has some pertinence, because it is not the same if you chose to use a commodity (such as wheat for instance) as a currency,  or if you use a completely abstract, otherwise worthless, unit of account such as bitcoin.  This problem has interesting issues per se.
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