The Real Value

Since gold is no longer the governing factor against which all other commodities can be compared – what can we use to figure out the price of what things are worth? We certainly can’t use the paper, coin and kilobits that we call money to determine what things are worth; that fluctuates everyday and depending on what country you live in, it could go up or down. For example, if you live in the U.S. right now (or are watching the price of things in relation to greenbacks), you see that a lot of things have apparently gone “up” in price. Oil has skyrocketed and gold has reached all-time highs!

However, what has actually happened in this case is that, yes, oil and gold have gone up in value relative to other things – but one must consider how much of that “increase” in the price of those two commodities can be, instead, attributed to the weakening of the U.S. Dollar? If you’re a Canadian, your dollar has gone UP versus the American dollar, and therefore, the gold and oil price rises haven’t been as great. Therefore, you must always consider the many factors involved in the rising price of things.

Just maybe, however, nothing has gone up in price: wages have gone down! Have you ever considered that? The price of oil, food, gold, etc. have all stayed the same, but it is wages that have gone down. Maybe it’s a conspiracy where the powerful people in the world are raising the price of everything in order to corrode your buying power. You see, they’ve gotten clever. Instead of giving in to demands of workers to raise wages and lose money… they just raise your wage a little, making you happy that you have “more,” and then just turn around and raise the price of everything beyond what you got! Smart, eh?

In actuality, that’s how inflation works, but on a slower and less conspiracy-like scale.

All I’m saying is that you should not just be thinking about the numerical value of the money in your pocket or in your computer – you must think what it can get you! Adam Smith says that corn is the good against which all things should be measured, because it is the staple of all food. He also postulates that labor is the REAL measure of what things are worth: as in; how many hours or days of work does a certain thing take to obtain? The longer it takes you, the more it’s worth. Corn in this case, is just a comparative measure. Make sure you compare the right things!