is the sp really that bad?, page-9

The word value has different meanings depending on the context it is being employed, namely:

1) it may mean the value in use, in which what counts is the usefulness of the object from the perspective of the owner or potential buyer, that is, the object's utility;or

2) it may mean the value in exchange, in which what counts is what one has to give up acquiring in terms of other goods in order to purchase a particular one. For instance in the case of purchase of a house it may be a boat, holidays in Europe, a BMW at the door, etc. This, is, of course, the price as dictated by the markets; or

3) it may mean the intrinsic, real, true or absolute value which is what stands out without the process of exchange and, according to some economists, is made by the quantum of labor needed to produce or obtain that thing, which represents the object's cost. This value is the point of equilibrium for the value in exchange or the value to which the value in exchange ultimately tends.

The things which have the greatest value in use have frequently little or no value in exchange. Nothing, for instance, is more useful than air, but unless one is scuba diving nobody is willing to pay a cent for it.

As gold requires labor to be produced then when people buy goods that, needless to say, also required labor to be produced they are exchanging labor for labor. Now you can understand why for the Austrian School of economics fiat currency, which costs almost nothing to produce, cannot be 'sound' money.

In the case of FML what investors want, of course, is the value in exchange, due to whatever reason, to move well above its absolute value.