Today I read a totally silly article which suddenly made me realize what always puzzled me about money. The article was called “Anglers let big cash bonanza get away,” published in Reuters on April 25, 2008. (I’m going to now sound like a complete simpleton.) The article is about three Hong Kong fishermen, one of whom is a housewife, who caught an 85 kg rare fish and sold it for HK $20,000. They thought they had really hit it big. Then the fish changed hands two more times, finally selling for HK $ 1 million to a businessman. The fishermen felt cheated.
Two things are weird about this to me. Firstly, the actual fish didn’t change. It arguably lost value by the time of the third sale since it was probably rotting. But the price paid for it increased so much. No extra work had been put into the fish, but within three transactions and not more than 48 hours, the price of the fish rose by nearly a million dollars.
The second thing that’s weird is that the people who initially sold it for $20,000 thought they had hit the jackpot, but when they later learned that the fish sold for HK$1 million, they realized they lost money. Yet, here again, nothing changed about their initial situation (their sale of the fish for $20,000). They still had the money. They had expended no more effort. So how were they the losers in this situation? But even my stomach churns for them! They were cheated!
Even though I know that this is a common and normal situation, I still find it difficult to understand how something is valued. How do we arrive at a consensus on what something is worth? And isn’t it strange that people are able to profit off the process of reaching that consensus?