Tuesday, October 20, 2015

Information Is More Valuable Than Money

Someone I know just said that information is worth more than money. She got a lot of disagreement for saying so, but of course she's right. For example, the information that money is worth exactly as much as people agree it's worth, no more and no less. On the microeconomic scale, for example, persons A and B may have identical items, but A sells his to a for $75 and, on the same block, 2 houses over, B sells hers to b for $200, if that's what A and a and B and b agree upon. And such price fluctuations are hardly unusual. And information may not be the only factor in the price difference, but it could be a major one. For example, a, B and b were all in possession of the information that items similar to these are selling on eBay for $250 and more, but A didn't know, so a was able to bargain him down to $75.

For another example: b didn't know that a seller with better prices was right down the street.

For another example, all 4 of these people knew how much the item would get on eBay, but a knew that A needed cash right away and was willing to exploit A' situation.

Or, the other way around: A knew that a was in a bind financially but was too proud to take an explicit handout, so he gave a a hidden handout in the form of taking $125 off the price of the item.

But it's not just on the small scale between individuals where money is worth exactly what people agree it's worth: on the largest scale, states can declare that their currency is now worth 1% of what it was worth up until then; or they can issue a new currency and say that every new dollar or pound or peso is worth 10, or 100, or 1,000,000 of the old dollars or pounds or pesos -- they can declare whatever they want. And other states can agree or not, it's up to them. And no matter what the states decide, their individual citizens can agree or not, just as they like. They can prefer to use foreign currency, which is a way of agreeing that the domestic currency is worth less than the state says it's worth. They can start a revolution if they entirely disagree with the state's fiscal policy, and attempt to install a new regime. One state can interfere with another, whether it's meddling with the other state's currency or attempting to overthrow the other state entirely, which is usually done wholly or in large part over considerations of money.

If you know earlier than most people that state I is planning to devalue its currency, or issue new currency, or to interfere with or overthrow state II, you can use this information for your own great financial gain; or you can publicize the information to the benefit of many other people. If many people have certain information it can have a huge effect on the prices of certain commodities and certain currencies. Mis-information often has similar effects.

The examples of information affecting the values of things including money are vast in number. The primary position of information is very simple and plain to see once you grasp it. Apparently, many people don't yet grasp it.

And THAT most certainly has a crucial effect on the value of money, and on people understanding what money is for, and coming to better, more sensible and mutually-beneficial agreements.

I don't know whether this post helped anyone, or if some people already understood everything I said and others still don't understand what I said.

There's another example of information controlling financial things: if an author can quantify and demonstrate information about the effect of his or her writing -- quantities like book sales, blog pageviews, readers' comments, etc -- he or she can use that information to justify an asking price for a publisher to reprint a blog post or take over the publishing rights for a book. And just with A and a and B and b at the beginning of this post, the amount of information the author has about the publisher and vice-versa can greatly affect the amounts of money involved in their interactions.

The possible examples just go on and on. I've given you examples at the microeconimic end, with individuals bargaining over the price of a single object, and at the macroeconomic end, with the fiscal policies of states. In the middle, businessmen are thoroughly familiar with the primary importance of information -- or at least they ought to be. Say that X owns a retail electronics business, and manufacturer Y is offering a shipment of computers to X at a certain price. If X knows that a new manufacturer is about to flood the market with computers priced much lower than Y's, then he or she may be in no hurry to do business with Y. However, if X knows that the new computers are of very low quality and that many retailers are going to buy more of them than they can sell, he or she just may want to get as many of Y's computers as possible.

Of course, if Y knows that X knows all of this, then Y may decide to up the asking price, or may be less inclined to offer X a big discount for quantity.

Information is key, the examples go on and on.

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