A unit of currency, even those based on elements with empirical worth, has absolute value. But this value is relative, both against other systems of measurement and in context of time and shifting events.
Fiat money, like the American dollar, derives its worth as a unit from government mandates and regulations, making it much more malleable than non-fiat currency, which is based in a commodity, such as gold, with intrinsic value. Yet, even the values assigned to commodities are subject to fluctuation as a result of supply and demand. The same principle holds true for cryptocurrencies.
But there is another aspect to the valuation of money that exists completely independently of market or treasury laws. And this is the discretionary value whose locus is individual conscience.
Discretion operates on two levels. There is dearness, the emotional connection a particular product inspires in a person, and cost-benefit analysis, “Is the gratification a product provides worth the asking price?”
Individual existence is the sum of thought patterns, emotional trends and experiences resonating. All or any of these can endear a person to a product or service. Uniqueness makes it impossible to measure the discretionary power of market interactions. This means creators need to find a way to connect with people on an individual level. As a result, genuineness and originality are emphasized.
When entrepreneurs present goods or services that either misunderstand individual sentiment or intentionally attempt to manipulate it, they risk alienating their customer base. Thus, there is exigency in maintaining authentic business practices and producing truly meritorious goods. Again, the driving force behind this is the individual whose purchasing power provides impetus for market innovations.
But, in the producer-consumer relationship viewed through an individualist lens, it is not just the consumer who benefits. Dearness is organically promoted from the bottom-up. A message must resonate first with a person, then with a group and finally with a plurality or majority. The truly original and meritorious creators whose product is based in principles must also be promoted.
This kind of power driving currency is important, especially in context of government-endorsed measures, like quantitative easing, which are designed to artificially inflate the market. This process, which has become necessary in order for the economy to remain viable and competitive globally, also inflates currency. Since fiat money’s value is based off a relative scale anyway, this drives up the price of goods, which diminishes the purchasing power of consumers and reduces the influence they can have on markets
And herein lies another reason the discretionary power of money is crucial. It loosens the grip of established gate-keepers. Though free markets do have a function at a macro level, they are grounded in the interactions between individuals and small businesses. When sight of this is lost, and markets are viewed as nothing other than another policy tool in the game of global politics, individual citizens, consumers and business owners become the slaves. The system is literally built off the products of their labor, yet they are given no influence over it and, since in this system agencies of overarching infrastructure, like the Federal Reserve, control its functions, they are forever doomed to this role.
Also published on Medium.