Money is fungible, but its inventory tags are not

This is going to seem weird to most of my blog readers because I haven't blogged about money a lot lately. In the past I often used to blog about the value of gold and that kind of thing.

I woke up with someone talking to me about the reasons why the concept of 'profit' is so distorted. I knew the reason why but was struggling to explain it. I remembered the word 'fungible' and looked it up. It wasn't exactly what I was trying to say, but it was similar.

I was trying to say, money isn't fungible. 'Fungible' means that any piece of money can be substituted for any other piece of money. One dollar is just as good as any other. But I was trying to say, No it's not.

Instead, every dollar in your 'inventory,' every dollar that you are saving and keeping somewhere, was 'bought' at a particular moment in history. You bought that dollar with some kind of labor - you had to work to earn that dollar.

When a business keeps other items in storage, in their inventory, they always keep a record of how much it cost when they bought it. If you have a hundred refrigerators in your warehouse, you know how much each fridge cost when you bought it. Each one has a tag. But people don't keep a record of how much each dollar cost when they bought it.

You wouldn't need a tag on every single dollar bill. But large groups of money, large deposits from a particular time period - how long? maybe a year? six months? whatever - all the money from that time period was able to buy a certain number of labor hours, refrigerators, houses, acres of land, gold coins, gallons of gas, food, and so on.

You don't know whether you're 'profiting' if you don't know how much your dollars were worth when you got them.

So I blurted out a couple of notes which I've left unedited - I was just thinking out loud. It is hard to understand and it was just my thinking process. This was saved in a Notepad file before I decided to blog it.

notes:

money is not fungible

look the word up, does it mean: each piece is worth the same as every other piece?

*****
Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. Examples of highly fungible commodities are crude oil, wheat, orange juice, precious metals, and currencies.

It refers only to the equivalence of each unit of a commodity with other units of the same commodity. Fungibility has nothing to do with the ability to exchange one commodity for another different commodity.
*****

Well, yes, KIND OF. You CAN substitute one piece of liquid gold for another piece of liquid gold. They are all the same. However, I am trying to say that the history of each item in inventory gives it 'tags' of historical ratios at the time when it was purchased, and a piece of currency is just another tagged item in your inventory, and you will do a first-in, first-out, or last-in, first-out, and so on, all those ways of VALUING YOUR INVENTORY. Costing inventory, whatever.

Dollars are NOT 'the master' item that doesn't need to have a 'cost' associated with it. You wouldn't have an inventory full of refrigerators without knowing what those refrigerators cost when you bought them and what they're worth now. But people carelessly keep dollars in inventory without knowing what they cost when they bought them. How many labor hours did it cost? How many acres of land? Gasoline gallons? Food? Rent? Electric bills?

Dollars in inventory, and gold pieces in inventory, and all other currencies being 'saved' over time, must have a tag describing some different ratios at the time when they were purchased, and it's informative to have more than one ratio. Dollars/gold, dollars/land, dollars/food, dollars/labor hours at some job, etc.

Do not keep any form of money in inventory without keeping a record of how much that particular item cost. Each deposit must have a tag. The money is still fungible, but the tags are not. You can still choose any particular piece of money and spend it today, and it will look just like all the other pieces. But the tags must be deleted from your inventory when you spend it so that you know what are the remaining tags on the rest of your inventory.