Money is equivalent of value and its main purpose is facilitating swaps of products or services. Thus, does it mean that the value of produced goods or provided services fluctuates by itself according to the volatility in the foreign exchange markets? From my point of view, intrinsic value does not change however, the demand may be affected substantially. In short term, there are measures to hedge market risks but do we have foundations to keep stability of currency?
Today’s financial systems are more sophisticated and money possesses more functions. The one is very important – it is used as a device for future value creation. So, could the interest of producers to growth their businesses as well as sustain price stability and financial intermediates goals to multiply existing capital be harmonized?
Moreover, how much the same amount of money could be multiplied? Theoretically, as much as it is not restricted, in reality the amount of money is as much as it was issued. Thus, is an uninterrupted growth of financial wealth available and isn't sustainable growth losing its meaning in the current financial systems?
The same misunderstanding may be applied to the financial decisions that are made according to the market expectations. What is a rationality of managing market expectations rather than cash flows?
I think that markets fail to reflect real value and money is losing its main purpose - being an equivalent measure of worth.
About Me
- Asta Pravilonytė
- Every manager can call him or herself a good strategist if he or she only works within an environment that is favorable; however, it is only in times of stress that one truly learns what one's capabilities are!
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