Finding symmetries in an unsymmetrical world ..

Calories , Economics and anatomy of “Out of Print” !

Posted on: January 13, 2010

There’s an interesting read that says “Money is a token that represents the calories of human energy or labor ” , i.e.. when money changes hands the energies put into producing those goods and services is “exchanged” for other goods or service, or “converted” into other forms of goods or services .

We say that the worth/wealth of any country is the amount goods and services they produce together. Also, we measure the amount of currency that any country can publish notes is measured by the amount of gold reserves it has .But with the flashy money “generating instruments” like credit instruments, we have more and more of virtual money which is effectually giving us the impression of money that is just “perceived to have some value” That being said, shouldn’t it come as natural that there be another alternative “currency” for measuring the goods and services a country produces ?

And what has Math got to do with the DNA of the economic structure , shouldn’t that change wrt the virtual money that any country can leverage this virtual money?

Let us take an example of hyperinflation in which the “prices increase rapidly as a currency loses its value” . This accompanied by a complete loss of confidence in the money and hence the impulse to change it to stable goods and services to prevent further loss , is another type of Virtual money at it best, Simply because the country growth- i.e. the goods and services do not supplement adequately the increase in the supply of the notes.So much so has been Hyperinflation in history that notes were even used to make wallpapers (Germany) , buy 3 eggs with $100 billion banknote (Zimbabwe) .In most of the recessions , it is the virtual money that was overvalued, and at the best of the same, the market correction happens so naturally and flawlessly ,as an means to end.

But valuing the virtual money will more often be riddled by flaws . Simply because there is no concrete Math there. How do I account for an ever-increasing no. of credit cards, which people use all round the month, to pay off theirs debts later in the mid of next month with what they earned “that” particular month ?  The flaw is that the “calories” , or the goods have already been consumed , so there must be a deficit somewhere ! And it is this deficit that gives the impression of a booming currency .


But is that to say to throw the flashy credit instruments out of the window, not take loans for the goods you cannot afford upfront, or conversely, not pay off the returns of “future events” or the rainy day like life insurance? There’s got to be a clique operating internally between saving , consuming , demanding and generating . And this clique balances itself very well . Only when it topples, it is what we see and discredit as flaws in the market instruments . Why not balance in , day in and day out ?

What do you think, how can we catch this pattern, and use to arrive at an equilibrium which  makes the market sentiment flow in a concordant rhythm all the while, giving a reasonable estimate ?

Well there’s another catch there (thus justifying why Economics is so complex) -The catch is that it is all based on (market) Information asymmetry , for we are not ,  aware of the market operating as a unit in an objective way – it is this subjectiveness that hurts .


So go on, Educate yourself, not because Money matters (which it definitely does) – but because it can save us all , and the market that the country operates on future , unnecessary ,and avoidable surprises , nasty ones I mean .

~
ek

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2 Responses to "Calories , Economics and anatomy of “Out of Print” !"

I think you have posed the most philosophical questions of socia-economics of the world today.May be the stochastic nature of the objective function is too probabilistic. As mentioned in a TED talk “The world should understand probability and randomness” may be that day economics will become more and more objective.

I applaud your efforts of posing these questions in a amicable way backed up with solid research evident from the succinct examples.I would pursue you to continue your fabulous endeavor and at least make an attempt answer one question objectively.
Waiting eagerly for your next post , it really gave food for thought to me today.

Cudos to you.

Thank you Kaushik, for that insightful comment .

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