#money_banking/value Summary::No objective measure for the value of money exists. --- # Notes Money must also follow the principles of Subjective Value. # Publication Journal - [How to Measure the Value of Money](https://freemarketcenterjournal.com/2024/08/13/how-to-measure-the-value-of-money/) Substack - [How to measure money value](https://clearthinking.substack.com/p/how-to-measure-the-value-of-money?utm_source=publication-search) # How to Measure the Value of Money If you want to measure the value of money, don't try. You cannot measure economic value (of anything). It seems a little counter-intuitive to say that one cannot measure the value of money when 1) value plays such an important part in economics and 2) most market exchanges occur with the use of money. Understanding this point makes it so much easier to understand why a central planning authority, like government, **cannot** effectively and efficiently allocate resources. # Subjective Value Individuals only provide the source and measure of economic goods. This includes goods and claims on goods used as money. Only an individual can determine that they value a specific economic good more than another specific economic good. Valuing by individuals applies to any form of money as much as any other good. # Prices Not Value Market prices do not measure value. Market prices simply reflect common rates of exchange between money and various economic goods. The values, always and everywhere, only exist in the minds of individual people, as I explained above. # Prices Used for Calculation Prices only show what most people value a good more than its market price. Although business people use prices as a means of economic calculation, they never know precisely where to set their offering prices (the price on the "price tag"). They can only know whether a set price will clear their shelves or not. The process is not perfect, but it works better than administered prices. # Macro Economics No measure of aggregate transaction. Because individual exchanges between individual people determine the best market prices, measuring aggregate transactions becomes a futile exercise. For this reason, the academic study called "macroeconomics" contains innumerable errors of aggregation # Conclusion The fact that you cannot measure the value of money means that individuals must determine what exchanges of economic goods make sense for the allocation of goods. Interventionists (e.g., governments) must stay out of the process. --- --- # References [Money Value] -- [monetary value] -- [Measure of Monetary Value]