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To: Wildstar who wrote (257)	9/14/2003 3:43:47 AM
From: Don Lloyd	Respond to of 445

Wildstar, I still believe that I received a psychic profit from exchanging one $5 FRN with five $1 FRN. Not only that, praxeologically, it has to be true that I at least expected to receive a psychic profit; after all, it was purposeful action. Since I repeat the act every morning, I conclude that based on past experience, I do indeed receive a psychic profit from the exchange. I can clearly see how you might say that the psychic profit was due to constraints imposed from outside by an inefficient subway system that imposes costs upon me. Yet, the world is full of inefficiencies and costs. My action was just a way to deal with those costs through exchange of exchange-valued goods. I still received a psychic profit, even if it was small compared to the psychic profit I receive when exchanging one use-valued good for another or one use-valued good for an exchange-valued good. I don't disagree with the fact of your psychic profit. The point that interests me is 1). why you get a psychic profit from exchanging/converting one exchange-valued good for another and 2). why it must be a relatively small one. 1). For all purposes besides riding the subway, the exchange value of a single $5 FRN and that of five $1 FRNs are identical. You may even have a psychic preference for the single $5 due to a relative ease in carrying. If the subway comes into the picture without an exact change restriction, nothing has changed. It is when the subway starts an exact change requirement that things do change. The available universe of things that you can buy with your $5 FRN is now smaller. Your $5 FRN is subsequently worth less than it was before. You now have a choice of paying $4 too much for a ride or going to the additional trouble and cost of exchanging your $5 FRN for 5 $1 FRNs. There is nothing inherent that prevents the subway from requiring the use of dollar coins, reducing the value of your $1 FRNs as well. The final step is requiring tokens, reducing the value of all your money. Yes, you may have a psychic profit, after everything is taken into account, but it is due to a vicious attack on the value of a part of your money. 2). The psychic profit must be relatively small or else you would be exchanging $5 FRNs for $1 FRNs all day long even if you never rode the subway. The large psychic profit involved must be the subjective value from the subway ride itself as compared with alternate uses of the $1 FRNs. Surely you don't ride the subway primarily to capture the psychic profit of the FRN exchanges. Generalization -- It would be theoretically possible for every vendor of a purchasable good to accept anything and everything that you possess for exchange value, and do his own conversions if desired. In some cases this could be the basis of a competitive advantage. The fact that this is not true reduces the potential exchange value of the things that you hold that are not accepted. That's enough for now. Regards, Don