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Fungibility is a measure of how easily one good may be exchanged or substituted for another example of the same good at equal value. Value as defined in economics is only a small subcategory of value in general, as defined in value theory or in the science of value. ...
Fungibility versus Liquidity
Fungibility is different from liquidity. A good is liquid (or tradable) if it can be exchanged for money or another different good. Many commodities that are fungible also tend to be liquid. For example, gold is fungible (I can trade pure gold scrap for gold coins) and highly liquid (I can easily trade gold for money), while diamonds are not fungible and have lower liquidity (two diamonds of the same weight are not necessarily worth the same amount.). There is not always this relationship between fungibility and liquidity, as air for example is highly fungible but illiquid. Whereas the fungibility of a good is dependent on the intrinsic properties of that good, the liquidity of a good is dependent instead on how frequently that good is traded. Market liquidity is a business or economics term that refers to the ability to quickly buy or sell a particular item without causing a significant movement in the price. ...
An example of Money. ...
The word commodity is a term with distinct meanings in business and in Marxian political economy. ...
General Name, Symbol, Number gold, Au, 79 Chemical series transition metals Group, Period, Block 11, 6, d Appearance metallic yellow Atomic mass 196. ...
For other uses, including the shape â—Š, see Diamond (disambiguation). ...
AIR is a three-letter abbreviation with multiple meanings, as described below: The Annals of Improbable Research, a monthly magazine devoted to scientific humour All India Radio - Indias Government Radio service AIR, a popular electronica band from France. ...
Fungibility in economics Examples of highly fungible commodities are petroleum, gasoline and precious metals. Fungibility is also an attribute of commodity money. Pumpjack pumping an oil well near Sarnia, Ontario Petroleum (from Greek petra – rock and elaion – oil or Latin oleum – oil ) or crude oil is a thick, dark brown or greenish liquid. ...
Gasoline, also called petrol, is a petroleum-derived liquid mixture consisting primarily of hydrocarbons and enhanced with benzenes to increase octane ratings, used as fuel in internal combustion engines. ...
A gold nugget A precious metal is a rare metallic chemical element of high economic value. ...
Commodity money is money whose value comes from a commodity out of which it is made. ...
Fungibility in relations Discussion about exchanges between parties is nearly impossible to separate from discussions about the relationships between those parties. Parents will often limit what their children may spend their allowance on. Employers will limit what their employees may purchase when traveling. Fungibility provides one a way to discuss such examples. For example shop keepers are sometimes willing to sell you a gift certificate at a discount because it creates a marketing relationship.
Fungibility gives rise to a persistent puzzle of how to retain control after funding an activity. Consider the example of charitable giving. Donors would often prefer to earmark their donations for a particular purpose. That frustrates the recipents who would prefer to retain their freedom of action. Both sides can find this frustrating. The donor can be frustrated to discover the money he gave for a particular purpose was spent as he desired, but yet the organization reduced its usual level of funding for that purpose shifting funds to other activities. This puzzle arises in all funding situations. For example, international development, venture capital, and children's lunch money. The goal of international development is to alleviate poverty among citizens of developing countries. ...
Fungibility and open/closed systems Beyond simple relationships fungibility can give rise to puzzles around groups. Groups may take the decision to reduce fungiblity for planning purposes. For example: annual budgeting in hierarchical organizations reduces the organization's ability to move funds across the organization. A group may place tight controls on the fungiblity around their periphery. For example in a nation that provides numerous benefits for its citizens, currency controls are needed to collect the taxes that support those benefits, particularly at the nation's borders.
Fungibility can make it difficult to get a clear picture of what's really going on. Consider medical debt where conversion of medical debt into a different kind of debt, such as credit card debt, will mask the real amount of debt's origin from health care costs. For instance, an individual might pay for his or her emergency-room visit on a credit card, and therefore convert health care-generated debt into credit-card debt. The fungibility of medical debt is oftentimes more insidious, however. In many cases, individuals are forced to pay steep health plan deductibles as well as out-of-pocket co-payments to receive care. These high medical costs drive many people to delay paying other bills, like mortgage or utility payments, which cause them to incur debt.
Fungibility in science In Does God Play Dice? The New Mathematics of Chaos, the mathematician Ian Stewart argues that fungibility applies to science as well. The example he uses is that subatomic particle theory is fungible when studying molecules "provided it led to the same general feature of a replicable molecule." Ian Stewart, FRS (b. ...
Another example is the concept of mass, either gravitational or inertial mass. Mass is fungible in all observationally consistent theories of gravitation. All compositions of matter fall identically in vacuum, including binding energies. Mass is a property of a physical object that quantifies the amount of matter and energy it is equivalent to. ...
Gravity is a force of attraction that acts between bodies that have mass. ...
The principle of inertia is one of the fundamental laws of classical physics which are used to describe the motion of matter and how it is affected by applied forces. ...
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