I like the gravity metaphor, but would leave out any earth or moon. Only people floating around in space pulling towards each other.
There is no objective price that you are pulled towards; Only a heap of people, with their own subjective price positions, that can pull you back. The reason I like this metaphor is because you gravity pulls on both objects. Someone else needs to buy your collectibles, you pull that other person up, as he pulls you down. ... Very loose metaphor, whatever
Hey Marvin, I like your intuition on this, but the one major caveat I'd add is that this model you're sketching out is probably too heavily skewed towards 'subjective' theories of value - i.e. people might indeed have subjective perceptions of things, and yet there are hard realities to how much energy and labour is required to make particular things, and if those subjective perceptions are not within the bounds of those realities the object ceases to appear on a market to be priced at all.
If I was using your version of the metaphor, I'd reframe the nature of the connections to be less 'subjective' and more a blend (for example, if a full-time worker is not paid enough to afford to buy groceries in the evening, their bodily energy will steadily decrease to the point where they simply do not turn up at work - this is an example of a 'non-subjective' economic connection that will exert a 'pull' in a network)
I agree. Physical reality creates lower bounds for the prices. At least for services. For durable goods, below that limit it is not worthwhile to produce them anymore, still those which exist already can be passed around on a market (below the price to which they could be produced).
Obviously, for the labor "market" this race to the bottom is quite dehumanizing...
Thanks for the feedback Mathew - technically speaking something like a share does have a rough 'fair value', but only if you can predict its future profits, but yes, each metaphor comes with its pitfalls
Nonreflective thought:
I like the gravity metaphor, but would leave out any earth or moon. Only people floating around in space pulling towards each other.
There is no objective price that you are pulled towards; Only a heap of people, with their own subjective price positions, that can pull you back. The reason I like this metaphor is because you gravity pulls on both objects. Someone else needs to buy your collectibles, you pull that other person up, as he pulls you down. ... Very loose metaphor, whatever
Hey Marvin, I like your intuition on this, but the one major caveat I'd add is that this model you're sketching out is probably too heavily skewed towards 'subjective' theories of value - i.e. people might indeed have subjective perceptions of things, and yet there are hard realities to how much energy and labour is required to make particular things, and if those subjective perceptions are not within the bounds of those realities the object ceases to appear on a market to be priced at all.
If I was using your version of the metaphor, I'd reframe the nature of the connections to be less 'subjective' and more a blend (for example, if a full-time worker is not paid enough to afford to buy groceries in the evening, their bodily energy will steadily decrease to the point where they simply do not turn up at work - this is an example of a 'non-subjective' economic connection that will exert a 'pull' in a network)
I agree. Physical reality creates lower bounds for the prices. At least for services. For durable goods, below that limit it is not worthwhile to produce them anymore, still those which exist already can be passed around on a market (below the price to which they could be produced).
Obviously, for the labor "market" this race to the bottom is quite dehumanizing...
The bungee metaphor implies that in the end the asset has a true value at which the price would rest if it weren't buffeted about.
I find that metaphors have a very short lifespan when talking about money, so I try to use them in a very limited way, before moving on to the next.
Thanks for the feedback Mathew - technically speaking something like a share does have a rough 'fair value', but only if you can predict its future profits, but yes, each metaphor comes with its pitfalls