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To: Don Lloyd who wrote (14857)	2/11/2002 1:44:22 PM
From: AC Flyer	Respond to of 74559

Don: Good points, let me respond: >>- basis of economic value, not labor but subjective marginal utility<< Same thing, imo, as in "(the product of) your labor has no value to me right now. Come back tomorrow, I may need (the product of) your labor more then" >>- description of medium of money, two functions = 1. medium of exchange for all goods and services, not just labor<< Shades of meaning also. The value of any good can be reduced to the sum total of the human labor required to produce it - to dig it out of the ground, refine it, shape it, work it, rework it, finish it, etc. - e.g. the sum of the conversion costs in human labor at every step of the value chain from raw material to finished good. This is easier to see in a simple product like a baked potato than in an automobile. Very easy to see in services - $50 for a 20 minute massage, etc. >>- description of medium of money, two functions ...... 2. store of future purchasing power for goods and services in an uncertain future<< Agreed - I wrote too hastily. Of course, what is stored is just hours of human labor - more hours of the landscaper, fewer hours of the orthopedic surgeon. >>- increased quantity of money tends to make purchasing power of a unit of money fall, and vice versa, ( I would expect you to agree, but not entirely sure )<< Agree 100% - "inflation is always and everywhere a monetary phenomenon" I believe that money that is slowly losing purchasing power is the best match for human aspirations and thought models (we like to see the size of our paychecks and the value of our house increase) - far superior to money that is gaining in purchasing power (with falling paychecks and asset prices), which drives us to reduce consumption and to hoard, causing disastrous economic dislocations. >>- capital additions improve the productivity of labor and allow increases in real wages (but not necessarily nominal wages)<< Yes.