Money - value

Money is a strange thing, completely abstract and mathematical in certain regard, yet held to be the most tangible of all things. Lately, people have been making the rounds on NPR, etc., expressing the thought that our ability to rapidly and accurately assess value is increasing, and will increase greatly in the future. This will make it possible to end "second chances," and rapidly sort the productive from the unproductive. Value and money are actually rather trickier concepts than this, and their relationship rather more complex. Financial panics would not occur if our ability to assess value were truly as advanced as such claims would have us believe, since a financial panic is a market perception that monetary valuation and emotional and tangible valuation are seriously out of alignment. Money is a very strange instrument. Consider the case of Long Term Capital. Here, a hedge fund constructed a mathematically formula which enabled them to sell the risk out of their portfolio, while keeping the profit, thus apparently being able to invest with no risk at all. No real asset that one could use money to purchase behaves in such a manner. A farm, or factory, or piece of equipment all have risk of loss or damage attached inescapably to any investment. I would argue that a market panic is an essential process which forces market valuations back into conformity with emotional and tangible valuations.