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a rationale of choices, hence values, because human nature leads minds to converge. The literal market adds a measure. When we step outside it, we make do without the measure and trust logic alone. A Diamond Ring Parable I like a picture of a diamond ring to show something about psychic value and yield, and even about what output and exhaust in consumption are. The ring brings psychic yield to its wearer. If it didn’t, it would have no value. Its yield is each psychic satisfaction, and its value sums all time-discounted prospective ones together. Value therefore drops just a little as each yield is finally realized. It is as with apples dropping from a tree. Yet the ring is inert. It ostensibly produces nothing. It also keeps all its value as a ring from day to day. Then where does the outflow of the value in the exhaust come from? How can value go out if none was deducted and none produced? In the tree, we can see the apples growing and falling. The answer is that some value was produced in the ring, and some deducted too. What we didn’t notice was the constant shortening of remaining discount periods. As each day passes, each future yield comes one day closer. These are the apples slowly ripening on the tree. Present value of each rises because the discount period covers less time. This creation of value is output by definition, even though nothing has moved but the hands of the clock. As the discount period reaches zero, the expected yield eventuates to explain the taste satisfaction. These yields are the apples falling to be eaten. The ring holds its value intact because the exhaust of value it surrendered has exactly offset the output of replacement value as time alone shortens discount periods. Yet not an atom stirred. The whole point is that the value of the ring or anything else is discounted present value of foreseen satisfactions. They are discounted because there is such a thing as “time preference”; we value satisfactions now over foreseen ones later. This is not quite the same as the difference between birds in the hand and birds in the bush. That says that we value certainties over probabilities. Time preference also values Chapter 3: Foundations 1/11/16 3 HOUSE_OVERSIGHT_010974