Post of the Day
March 31, 2000
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The Day Value Died
Valuation may not be "dead" but perhaps it has transmogrified to something very different in the new economy.
It is my sad duty to announce that today, at 5:01, Central Standard Time, value died.
When this becomes fully known, the following will happen: Shoppers will totally disregard prices. It will not matter whether a dozen eggs is priced at $1 or $100, the same people will buy, the same quantity will be sold. Buyers will happily pay $50,000 per car regardless of whether it is a Lexus or Dodge Neon. Matter of fact, price tags will be removed from all items. The customer simply fills his basket with his selections, the clerk charges random amounts as the selling price, and a VISA card charging somewhere between 1% to 25% annual interest - who knows, who cares anyway - will be run through to complete the transaction. No signature is required. Why bother? Did the store charge the customer 1 cent? Nobody will quarrel over that amount. And 1 cent is the same as $1,000, value being dead and all, so what difference does it make? Employees will not know nor care what their compensation is. If the price of all their purchases is random, why shouldn't the price of their income be random as well. The budget of the federal government will be $1.25, or $125 trillion, what difference does it make? For value will be dead. When value died in the stock market all other financial transactions became infected as well.
"Sir, here is your new Hyundai Accent. It is only $65,000. But I have it on good authority that it will be worth $75,000 next Tuesday afternoon. You want two? Great, sign here. Oh, you have a trade in? A 1963 Dodge Dart? Splendid, you have money coming back. Those are worth $150,000 each! It is a good thing you did this today, yesterday that year of Dodge was worth only, let me see, yes, $5.63."
When value died, the glue between the economic usefulness of an item and its price became unstuck, allowing randomness to become the only available method of determining prices.
"I will trade you 3 Cisco shares and my house for 12 shares of Red Hat. But what really is a share of Cisco worth? Why, a piece of lint, a bottle cap, two baseball trading cards, and a Southwestern Bell yellow pages from 1996, that's what. What is a house worth?"
Some wise acre claims that if a share of Cisco is always worth more than its current quote, if it can always be sold tomorrow at a higher price, then it can never reach its full value and is worth an infinite amount.
"Today, the closing price on the New York Stock Exchange for Cisco was infinity. The price however continued to rise in after hours trading, moving the per share price to 110% of infinity. Some analysts predict that Cisco will be priced at 2 times infinity by the end of the quarter. Based on reports of some bad lasagna in its cafeteria, Microsoft closed down at only 90% of infinity, off $2."
And some other wag, some smart mouthed know-it-all, some dyed-in-the-wool cynic, suggested that if value no longer had any meaning, and prices had become random, then there was no longer any useful measure for financial transactions and we should just rid ourselves of prices entirely and just give products away. He suggested that everyone just take what he needed and give back what he could. Do you believe this guy! Can't he see how ludicrous an idea that is! There must be some basis for financial transactions!
"A disturbing report from Tulsa today. Two boys in a city park attempted to engage in what was once referred to as a barter transaction. Witnesses claim that one boy offered to trade his box of See's truffles for the other boy's yo-yo. One witness of this disturbing event was hospitalized, gasping a value transaction, a value transaction. Since the two boys were both minors, it is not clear what charges will be brought against them. They have been released to the custody of their parents. Video at ten."
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