The Balancing Act: How Prices and Money Harmonise the Economy
Hi Plebs,
There is never a perfect balance in the economy, but prices going up and down help move it toward balance through trial and error. Every person reacts differently to the changing prices they see. Prices show people which businesses to start, what skills to learn, and which jobs to get. These choices depend on each person's interests, values and what they are good at.
Sometimes too much gets invested in certain areas because people guess wrong about what consumers want. That's just how trial and error works. Nobody can predict the future perfectly. Prices guide people's decisions. A business makes a product to sell for one price. If not enough people want to buy it at that price, the market is telling the business something. Better luck next time. Make something else people value more.
Imbalances get worked out through this process. The people taking risks deal with the consequences. It's an endless back-and-forth matching people's ideas and talents with what customers want to buy.
Money is the tool used to coordinate resources and to test the market through trial and error. It is the foundation of a price system that distributes information to all participants - the better the money, the more reliable the price signals. And the more reliable the price system, the greater the balance in an economy. Those who deliver the greatest value to the largest number of people are naturally rewarded with the most money.
But money would be of little value if others were not also producing goods and services that people value. The system would not sustain itself if this balance did not exist. Purchasing something from someone else requires that you must first earn money yourself. And providing value that others deem worthwhile is a far better way to acquire money than through means like stealing or counterfeiting (printing). It is the only way for trade to be a reputable, symbiotic cycle rather than a one-off, zero-sum game. What good is a customer that runs out of money or doesn't have any to begin with?
In a balanced economy, every producer is also a consumer of someone else's goods and services, and vice versa. As the old adage states, "Give a man a fish, and you feed him for a day; teach him how to fish, and you feed him for a lifetime." The balanced cycle of earning and spending, producing and consuming, is what allows an economy to flourish over the long run.
You don't have to be religious to understand money's important job. Money has an important job in the economy. Everyone tries to make things that others value. And people benefit when more variety is available. All participants want to provide value to others and have others provide value too.
This isn't just an ideal view. There are real benefits to more trade, specialisation, and more choices. Money coordinates who does what job. The type of money with reliable prices delivers the greatest value with the most variety.
A clear price signal is what people truly value. They ensure price information is not false. When not manipulated, money's pricing system fixes imbalances. It governs the economy to create balance and allows relationships of mutual benefit.
Constantly testing prices against supply and demand allows an economy to self-correct. It lines up resources with what society needs and wants. Just as evolution favours fit life strategies, market competition rewards businesses providing what consumers want most. Reliable, stable money makes this possible.
Cheers, and onwards with Bitcoin.
