“TREASURE OF THE SIERRA MADRE”: THEORY OF GOLD PRICES

April 17, 2011 at 4:28 pm | Posted in Art, Books, Economics, Film, Financial, Literary | Leave a comment

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“Treasure of the Sierra Madre”: Howard’s Theory of Gold prices

Howard: Say, answer me this one, will you? Why is gold worth some twenty bucks an ounce?

Flophouse Bum: I don’t know. Because it’s scarce.

Howard: A thousand men, say, go searchin’ for gold. After six months, one of them’s lucky: one out of a thousand. His find represents not only his own labor, but that of nine hundred and ninety-nine others to boot. That’s six thousand months, five hundred years, scramblin’ over a mountain, goin’ hungry and thirsty. An ounce of gold, mister, is worth what it is because of the human labor that went into the findin’ and the gettin’ of it.

Flophouse Bum: I never thought of it just like that.

Howard: Well, there’s no other explanation, mister. Gold itself ain’t good for nothing except making jewelry with and gold teeth.

Comment: This is the Labor Theory of Value in economics

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