Funny Money

When was the last time you thought about the value of money? Possibly this morning when you filled up your gas tank with $3.00 a gallon gasoline? Or was it last night on the way home from work when you paid more than $2.00 for a cup of coffee at your favorite expresso cafe. Maybe neither activity spurred you to give the transaction of money in exchange for service and stuff a second thought. However, the act of giving something called money for something else you wanted or needed has implications that reach dizzying heights.

Each and every transaction that you make infers that you believe that you received a fair exchange or why would you do it? How do you know if the exchange was fair? What is fair? How do you measure fairness? Most of us seldom think about the fairness of smaller transactions such as buying a cup of coffee for $2.00. We simply pay and walk or drive away without a second thought. However, behind these transactions and every exchange of money for something else is the inherent belief that you are getting fair value for the money you spent or you would not have made the transaction.Without conscious thought you actually gave the vendor of service or stuff or both money that you worked for or derived from investment or inheritance or possibly unlawful acts. Whether you secured the money illegally or not, whether it was from physical work or investment, or from royalties or intellectual pursuits you were paid money for those acts and used the money to obtain something you needed or desired.

Whether you are the richest person on Earth or the poorest laborer in a third world country the same exchange process occurs when money is exchanged for something else. Neither the money nor the service or stuff has intrinsic value beyond what you believe it has. Their is no such thing as absolute value. Value is in the mind of those involved in any particular transaction, and very dependent upon the economic circumstances of those making the transaction.

Let's consider the example of buying your first home. Regardless of the amenities when you offer to pay for a home you first consider what and where and then how much you can or want to spend. Others build or previously built your prospective home and were paid money for their design work, materials, and physical labor. The list of people eventually involved includes many who were not directly involved in the final transaction but were essential for the final exchange of money or promise to pay money for the house you finally decide to purchase. Every individual involved in providing materials and labor from the extraction or processing of raw materials to the finished part or structural component engaged in a similar transaction for which they earned money in exchange for their individual contribution to make your eventual home a reality. The sum of all these exchanges of work or material for money creates some sense of value, but the value cannot be considered exclusively a matter of adding all the exchanges for a total value.

Some exchanges are not based on hours of labor but rather the subjective value of a particular service or component. A gold plated shower head with lavish crystal glass adornment serves the same function as a chrome plated brass shower head but is perceived to have much greater value because of the material used and their comparative rareness. Some people are able and willing to spend much more money for the same function then others. The shower head there is valued not for function but for subjective reasons that have no intrinsic value. The transaction involving the home buyer and the included amenities and the contractor or seller is always a function of perceived value often based upon subjective or emotional responses. Of course ones ability to spend more money than another buyer is a function of acquired wealth.

Needless to say only the very rich would be able or willing to buy a home with gold plated and crystal embellished shower heads. This type of transaction clearly demonstrate that value is not purely dependent upon function, but is substantially dependent upon the economic status of the individuals making the transaction. Clearly value is not determined objectively. Value is not absolute.

Where is all of this blabbing about money and value taking you the possibly puzzled reader? Please wait for the next episode of Funny Money that will follow once the value that I attach to writing it exceeds the value of my time thinking about Funny Money. Thanks for your patience and fortitude reading this blurb. Meanwhile you may find it interesting and useful to begin analyzing your transactions involving the exchange of money for goods and services by considering the reasons that you are making the transaction before you put down your Funny Money. The reasons may shock you and even change your mind.