ANSWER TO A QUESTION FROM NEW YORK — HOW TO DETERMINE THE VALUE OF MONEY “EXACTLY”
Among many good questions, Patrick Hedemark of New York is concerned with how (or whether) to determine the value of money “exactly.” I explain that no such method really exists (not even in a precious metal monetary standard), and that it’s not critical that we lack such a method:

The first thing to remember is that until a perfect system of determining the value of productive efforts is ascertained, it cannot be a just object of a monetary system or a government to impose an imperfect method of evaluation.
Even if you make the value of a unit of money ostensibly equal to a fixed quantity of a finite substance such as gold, the truth is that the costs and derived value of every produced unit of gold are not equal.
Some period of conditions may justify producing gold as necessary. Others may not. Why not let a truly free market determine the relative value of gold?
In some cases, the market might justify producing more expensive gold for instance, after the less expensive gold is occupied by existent consumption. Yet if some day we intended to justly determine that it generally requires at least so much cost or effort to produce an ounce of gold, and if we make that the “value” of “money,” then that money thus cannot be a marketdetermined token of value of all things; nor can it be a marketdetermined value of gold.
But if we have fixed the value of gold below a later, higher cost of production, we will have made it uncostworthy to render the production the market may yet later need. Thus, even by fixing a value which once was just, later, more expensive conditions of production may preclude prospective producers from mining gold for a future market, simply because the fixed price is insufficient to cover the costs of production.
Can the whole valuation system change so that the fixed price can be accommodated by the market for gold?
It is pretentious to assert any system has such a capacity unless all values and monetary commitments are perpetually adjusted to all such developments. In fact, no system but mathematically perfected economy™ provides such a mechanism, because only mathematically perfected economy™ provides truly free markets, and because only mathematically perfected economy™ makes it possible for each market both to determine and to fetch just prices, without affecting the value bases of all other markets.

Nor is any reasonable method of evaluation critical to mathematically perfected economy™.
If the cost of productive effort is justified to both the consumer and producer, MPE™ alone sustains (without inflation/deflation or multiplication of debt) not only the transaction, but the work necessary to repay the monetary obligation.

Thirdly then, because the development of expedient and comprehensive methods of evaluation is useful to all of us in every prospective endeavor or transaction, we can and should develop and debate ideas, and we can refine an agreeable concept by solving for our differences.
But even then, unless our ultimate method of determining value is perfect, have we a right, or is it even necessarily useful, that we impose it?
Just about anyone on the planet has spent most of their adult years again and again conjuring how to conceive of the relative value of what we do, in respect to the value of whatever each of the rest of us does. This thinking is all that justifies any endeavor or transaction. Some of us take the thinking seriously. Sometimes casual consideration suffices.
We may have heard ridiculously uncomprehensive concepts which are purported to account for value. In a certain case, a claimed 400 or some odd “scientists” for instance have endorsed making “energy” the currency of trade, without the first explanation of how we would justly do so; and so, as the following arguments invalidate the proposition of making time the unit of currency, so to do they invalidate mere energy as a singular basis of value. In the least, we are to understand that both are inappropriate because they do not account for all the vital factors which comprise value or justify production.
You want to consider making *time* the unit of the currency. Why won’t that work?
Let’s say you have X number of children, and you need them to weed the back yard. Being a fair man, you do your best to divide the yard, despite its different numbers and kinds of weeds and terrain, into an equal task for each.
How would you do this so that the ostensible value of their labors is equal? How would you take into account the exact difficulty of the makeup of the soil and the mixture of weeds so that indeed you gave them each an equal job?
Suppose you gave me an answer to your quest for a method of “exactly” determining value. The first thing I would ask you then is how you measured each of these things exactly? Did you count the weeds? Did you divide the yard into areas where the borders of the areas explicitly included the intended weeds? Did you test the difficulty *and time* required to pull each *different* weed out, complete with the roots of each?
You would probably answer, No, of course not. Why?
Practically without exception, we don’t even ascertain or measure the criteria exactly as would be vital to determining value “exactly”; and so in fact, no matter what you had answered, the principle of an ostensibly “exact” method of determining the alloted tasks isn’t even applied to the units of area, varied matter or conditions, or even the number of weeds. Likewise, do we count the studs in a home we are about to buy?
There is a good enough reason we don’t even try to account for all things exactly: First of all, we regularly can’t; but if you did, the job of accounting exactly for exactly all factors might be far greater than actually pulling all the weeds yourself.
So, because you can’t divide the yard into X areas that result in *an equal effort* for each of your children, which in turn results, with ostensibly equal work, in your children all *finishing in the same time*, neither can you say that you have figured the job so that *time* spent on the different parts of the job is of equal value. After all, your X children, starting at the same time, will not finish at the same time, because you haven’t even determined a way to make their time spent at the job of equal value/volume. But neither too, unless the production of each is the same periodically, would they finish at the same time, even if you had divided “the job” “exactly,” because neither is the effort they spend across time of exactly equal value.
Using time as a standard therefore does not determine equal work. Only in the most exceptional case in fact does it determine equal work, because people rarely work at exactly the same rate, or render production of exactly the same quality.
A perfect system of evaluation must take all these things into consideration, and account for them “exactly.”
After all, if one welder puts 4 10inch Schedule 40 joints together in a day’s work, and if a second welder puts together 20, and if 1 of the first welder’s daily welds generally fails an Xray at the refinery in which every weld must prove worthy, the redoing of the first welder’s one failure a day may be more costly than the sum of the rest of their work (3 welds). If no one else is working to that standard, to the contractor who has bid on the job, that welder’s work is worth nothing, or it may even be rightly considered to have a negative value.
If on the other hand everyone else but the second welder works to that standard however, then generally, as it may generally be necessary to do the work of 8 welds (2 days’ production) to get 4 good welds (1 days’ attempted production), that’s the price of the labor/production the contracting outfit may be forced, by the trials and tribulations of welding, to contend with.
But that means the second welder — who comprises the lone exception — is doing 40/4 days of the general volume of production of “work” every day (per time). For the productive volume of their efforts then, are we not to pay them 10 times the wages of the other welders, which is indeed the comparative value of what they are producing for the contractor?
Well, in certain even potentially prevalent cases, this might not happen because the *hour* might be a selective simplification which serves the employer to cheat labor from justified pay. By bidding jobs on the low end of labor costs, and not rewarding productive labor, contractors can take substantial unearned profit.
The quality of the second welder’s work might be 10x as great as the usual welder’s as well. Shall we pay them 100 times as much as the usual welder then?
If the quality of the work exceeds the requirements of the job spec, then the contractor is not justified in doing so. But the contractor *is* justified in at least rewarding the more productive second welder relative to how much work they perform daily — especially as this reduces the risks of weld failure, and potential later, consequent costs to the contractor. The second welder is valuable. Their time is worth far more to their employer.
The welders are also exposed to dangerous gases, and to asbestos. Do we simply give them the same wage per hour that we award a student who hands prepackaged hamburgers thru a driveup window?
Anyone therefore who tells you they account for all factors exactly, which determine the value of productive effort exactly, is yanking your leg. In fact, in any system such as this, where the relative value of one thing can only be known by the relative value of all other things, until we have a comprehensive system for determining the “exact” value of everything, we do not have a comprehensive system for determining the “exact” value of anything.
In fact, we find that given values often are rightly even in flux if we account for the difficulties of production, which comprise periodic differences in the job of production. Therefore a purportedly “exact” method of determining value must account for these differences in the job of production.
Personally, I figure I’ve given as much quality effort to determining the value of production as anyone; and what I’m about to tell you is I see little sense, or benefit in trying to determine value with purported exactitude, particularly because even determining all the vital factors of each instance becomes such an intensive job itself — making the necessary determination of the relative value of all things ever more elusive and costly.
Ballistics for instance is a relatively exacting science; but it is not perfectly exact. We *can* determine the relatively exact minimum velocity of a throw a third baseman might have to make to first base. But is it necessary or conducive for the third baseman to make that determination in the midst of the play? No. Instead, by experience and training, they recognize when they must hurry a throw, and thus how much routine carefulness they must forfeit to try to make the out.
There are for us likewise, rules or principles we should follow.
I dismiss the idea that we should account for supply and demand, because on the contrary, the idea of supply and demand is merely a tool of exploitation: It does not determine the value of production; instead it determines the stress it can impose on a market deprived of the opportunity to decide the value of the work of production. The concept of supply and demand determining “value” therefore is a destruction of the concept of determining the value of production. That destruction can and will usurp earnings from the deserving while multiplying unfair prices to whatever degree the market can stand.
Supply and demand therefore is utter corruption both of the idea of determining real value, and of appropriate distribution of wealth (or just reward for production).
Your question is pertinent, and it is a goal we should have, at least in some cases which I mention subsequently.
But in my estimation, at least 3 things will go awry in the best efforts we can reasonably make to determine “exact” value:
 no way will we truly account for all things exactly;
 nor will the other guy with whom we’re trading;
 and finally then, neither will *we* have any real basis to determine equality in the other’s work.
All we can do then is the best we can, with reasonable dedication to determination of approximate value.
Largely in fact, we are best assisted in this effort by the integrity of the society.
Only in a society where no one is seeking unearned profit, and where instead everyone is conscientious about the relative value of their own work, can we trust in the price they ask of their work.
Integrity therefore is the most valuable and expedient tool for determining value as “exactly” as is practical.
For ages, except as compelled by usury to seek unearned gain ourselves, we’ve settled for integrity determining value, because it gives us the opportunity to forego repeating all that determination ourselves without access to the many vital facts which would determine value.
Where there is integrity, instead we can trust that suspicion will be raised by some clue that the principle of integrity is violated. *Then* we the buyer can roughly determine approximate value, in fact actually appraising the integrity of the price asked.
The more unearned gain usury demands of us on the contrary, the more the subjects of usury themselves are driven to corruption, and the more we can trust instead that price involves maximal possible unearned gain.
An obvious penalty of usury therefore is destruction of integrity, because integrity is least likely to survive the penalties of usury.
In mathematically perfected economy™ therefore, the only penalty we suffer is whatever errors we make in trying to determine equivalence.
In the end, just as in dividing the task of weeding your yard, as the extra effort we may make in *trying* to determine exact equal value may very well exceed the small difference we are trying to determine “exactly,” we do better in terms of the time we give up by taking the loss of our rough estimation. Let your kids pick or draw the lots, or determine them among themselves.
So we resolve the issue more effectively be settling for what we cannot determine exactly, but can determine roughly or to sufficient satisfaction by simple means.
We know for instance that carpenters and plumbers and electricians and drywallers and roofers and so forth are involved in building the home we want to buy. None of these are equivalent to our own trade; neither if they were, is our work worth exactly what these practitioners’ is. But perhaps we are that second welder; and although the many contractors who gladly employ us keep us working all we need, no, they don’t pay us but a pittance of what we’re worth to them but by giving us a few overtime hours here or there. We accept that or we don’t. But if we do, we’re not going to get equal production for our production, are we?
Absolutely not.
But because we are paid at least somewhat better for our demanding class of work, at least we can buy our house for substantially less *time* than the workers who produced it put into it; and we don’t have to pay the bankers 3 houses to get our 1… for publishing a promise to pay we should issue ourselves.
If you or anyone else in history has a better idea, I’m all ears. But it isn’t to make time the unit of currency.
It is not the job of an economic system therefore to impose a method of determining value. Nor are markets free to determine value, if they are subject to usury or market manipulation by cost and demand through vehicles such as commodities trading.
The only truly free market therefore is mathematically perfected economy™, because only mathematically perfected economy™ eliminates all the redundant, unearned factors which exploit price to the detriment of the producer and ultimate market.
It is hogwash for instance that Austrian Economists — who in fact advocate interest — assert that if we leave determination of price to markets which are subject to interest or buyers of futures, “the market” resolves value.
On the contrary, unnecessary cost is imposed by exploitation. Only a market free of predation, and subject only to the real costs of production, is free first to determine the value of production, and secondly to distribute wealth justly (to acquire just reward for its endeavors).
Thus I do believe we should leave it to truly free markets to determine value; and I’ll tell you why:
First of all, that’s what the market wants to do: it wants to be free of predation; and it wants to be free to determine value. So why not let it?
Secondly, what’s going to happen with our second welder?
Given the minimal costs of mathematically perfected economy™, with the opportunity to readily afford going into business for himself, he can tell each contractor he works for that he will settle for a wage say 8 times the going rate for his fellow welders (taking 80 percent of his demonstrated value to make the working situation quite comfortable to his employer); or, to base his wage on production, making it even more conducive to the sanctity of his employers, he can divide a day’s wages by the usual 2 effective welds per day, and offer to take something like 80 percent of that per weld. In either case, the contractor is making an extra 20% profit over usual wages, and our second welder can at least make 80 percent of what he’s worth in terms of volume of production.
On the other hand, if the contractors refuse to give him that, he can buy a welding truck for a pittance under mathematically perfected economy™ and compete with the contractors by underbidding their welding costs by 20%, and they can’t touch him while he makes a due comparative fortune for the efforts which make him excel at his craft.
A truly free market can indeed determine just value.
But where contracts can be purchased by corruption, or the dollar is subject to interest, or futures traders might fix the value of his work without any consideration whatever for its costs or real value — or denying him the opportunity to acquire the value of his work — just value and reward are only made impossible.
So to summarize…
 No one determines value exactly;
 If we had to wait for a perfect method of determining “value,” we would never have mathematically perfected economy™;
 Not only is that prospective delay unnecessary then, it would be quite pretentious of us to conceive it is even worthwhile to try to determine value “exactly,” given even the likely errors of the many who would have to correctly apply the method, and the even higher costs of just trying.
You and all the rest of us have made do in terms of determining the relative value of our money, even as that money can only multiply debt into terminal debt, and even as that money is constantly devalued by the process which does so.
The most real possible value of money which is strictly a token of wealth however, is still merely relative, and approximate.
The best we can do so that the approximate value of money we have decided to our relative satisfaction is enduring however, is to eliminate multiplication of debt in proportion to the money, and to maintain a circulation which at all times is as equivalent as we can rightly determine, with the remaining value of the property which, across time, we intend for it to represent. This is why these are goals of mathematically perfected economy™, which of course have long been recognized goals of real producers, even if they have been made impossible by ages of usury.
Shall we continue paying “bankers” 3 houses for printing *our* promise to pay on *their* paper until the sum of debt was terminal yesterday?
Or shall we cut our losses to the small inconsistencies we have so far found agreeable in determining approximately equivalent value… especially as there may not even be any overall benefit in the potentially impractical task of “determining value exactly”?
“To find the players in all the corruption of the world, ‘Follow the money.’ To find the captains of world corruption, follow the money all the way.”
mike montagne — founder, PEOPLE For Mathematically Perfected Economy™, author/engineer of mathematically perfected economy™ (1979)