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To: Don Lloyd who wrote (374)	9/4/2001 12:17:28 PM
From: Ilaine	Respond to of 443

>>The theoretical value of our definition is not in the least reduced by the fact that we are not able to measure the fluctuations in the objective exchange value of money, or even by the fact that we are not able to discern them at all except when they are large. ...<< Thanks, Don. But the point you raised yesterday about the increase in agricultural productivity was good - if the supply of a good is increased but the demand does not increase proportionately, the price of the good is going to go down - because some of the people who produce the good will cut prices in order to differentiate themselves from the others who produce the good. This is most likely due to individual choices, without respect to the money supply. And a similar effect occurs when a good becomes more scarce - the sellers raise the price because they assume that some buyers will be willing to pay a higher price, and they're right. Again, this is without respect to the money supply. I think something different happens when the cost of producing a good goes up - fruits, vegetables and wine from California seem to all more expensive, I think, partly due to the difficulties with natural gas earlier. The higher price of producing wine shouldn't affect wines from the 1990's, but the wholesalers probably experienced an increase in the cost of storing and shipping wine. So they've raised their prices, but I've cut my consumption because there are substitutes.