How do we determine value? What's our measure? In Ancient Rome, a gold coin could buy you a good quality toga, a pair of leather sandals, and a leather wrist band to boot. That same coin today can buy you roughly the same type of items. A nice suit, slacks, and pair of shoes -- maybe even a watch. Certain currencies like gold and silver hold up through time. That's because we as a society believe in it. We don't often consciously think about how much something is worth. We usually just go with it. But remember; money only works as long as we believe in it.
What if instead of pieces of paper with Benjamin Franklin's picture on it we used fingernails tied up in red bows. Absurd? Yes, but currencies in South American tribes have used more, shall we say, odorous "items" to exchange their goods. Say you enrolled in a Forex training course and really wanted to understand how currency exchanged worked. Well the first thing you might realize is that the fluctuation of currency strength is never fixed. And, it's never questioned. Why one country's currency slips as another one rises is never really questioned. In order for meaning to exists, we must first believe in it.
What about the mysterious diamond trade? The belief in the idea, or myth rather, that diamonds are scarce allows De Beers to sell at such an exorbitant rate. Gold, silver, copper, sugar, all work on the same principle. The time, tools, and person power all play a big part in adding the idea of value to those minerals. Just because those minerals are in the ground don't give it value. Weeds grow in the ground and how often do you see Wall Street brokers biding on that natural wonder? Which leads me to my next question.
Age plays a role in the debate over worth. When you are sixteen you are further away from death. Your pay is low. When you're sixty, on average, you get paid more because you are closer to death. Now we go back to the word scarcity. It's defined as "the problem of infinite human needs and wants, in the world of finite resources. Society has insufficient productive resources to fulfill those wants and needs." So being sixteen years old you have more time, and if by having more then that means the value of your time costs less then if you were sixty and had less time (because of the limited nature, or finite amount of time you have). Life becomes more layered and complex as it goes and other factors, such as education and talent, help determine ones value.
What if I did indeed take that Forex course and learned how money is exchanged? Would it explain by which factors does a counties currency rise or fall? Take England. Why has the pound stayed as high above the dollar and Euro for so many years? Because the British government believes that it should be that high. Arrogant, I know. But if belief can adjust a currency and belief is not something that can be exchanged on any market then how is quantified? If we would just realize that having belief in ourselves raises our own value then I think that the market out there would have to adjust around us and not the other way around.
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