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Wednesday, 19 March 2008

What is real value?

Real value is what you can sell things for right now. That means, someone is willing to buy them from you for a specific value payable immediately.

There are three basic things in the economy:

1. Things that have changing real values.

2. Money.

3. Things that have constant real values.

We express these values in money terms. Everything has a money value but that does not mean it is money because be buy and sell it in money terms and we use money to pay for things. Only money is money.

The real values of things you do not own are the market values of those things right now.

The above real values change all the time as the supply and demand for these things change.

The above relate to the real values of things that have changing real values.

There are two more basic things in the economy: money and things that have constant real values.

We will look at money´s real value in the next post.