Re: [Pen-l] What is the Crisis About? Fictitious Capital or the Destruction of Wealth?

[Jim Devine <jdevine03@xxxxxxxxx>]

Shane:
> What difference is there between the "actual [monetary] value of real
> assets" and the reproduction cost of those assets?

me:
> the actual value would reflect the possible _benefits_ to their owners
> from the use of the assets.

Shane, now.
> But isn't "market valuation" the only conceivable measure of the "actual
> value" of a capital asset, whose only benefit to its owner is the "possible"
> income stream accruing from it?

We could hire an expert to evaluate future benefits. We may value the
opinion of that expert more than we value the fad- and bubble-prone
stock market. (Warren Buffet, it is said, makes his moolah on the
difference between these.)

Strictly speaking, of course, the value of the benefits can be
determined _ex post_, after they're reaped. Our expert may easily be
wrong, as with Mr. B.
--
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.
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