Whatever has a price has a (dys)functional quality or characteristic that is, by natural accident and/or intentional artifice, periodically made scarce.

The price of a good or service is a measure of the frequency of periods of scarcity.

• The period is the duration of time of one cycle of a periodic event, and the frequency is the reciprocal of period: the frequency is the number of occurrences of a periodic event per unit of time. 

  • Frequency, as the density of occurrences given a unit of time, is an intensive quantity; period, as the length of time between occurrence, is extensive quantity. 

  • Many varying periods, or rhythms, can underlie a given frequency.

    • My heart might beat at the frequency of 120 times a minute, but that doesn’t mean that there was exactly half a second period between every heartbeat over the course of a given minute. There may have been a quarter second period between two heartbeats during a given minute and a three quarter second period between another two heartbeats during that same minute.

A price, being a measure of frequency, is an intensive quantity as opposed to an extensive quantity.

• A price is a measure of the density of periods of scarcity over a given unit of time.

Before you can form a price by counting (on) periods of scarcity over a unit of time, one must first provide a unit of time over which to count (on) periods of scarcity.

• Question: Why “count (on)” periods of scarcity as opposed to simply “counting” periods of scarcity? 

  • Answer: The price of a good  is not determined by counting periods of scarcity over a given unit of time that has already past but, rather, by regarding a unit of time that includes both the past and the future: by counting past periods of scarcity, on the one hand, and, on the other hand, by counting on there being future periods of scarcity. Which is to say, in other words, that there is both (mis)recollection and (mis)anticipation at work in price formation.

    • To raise the price of a good one gets others to (mis)anticipate that a (dys)functional quality or characteristic of a good or service that has been scarce less frequently in the past (according to their [mis]recollection) will, for some reason or other, be scarce with more frequently in the future. 

    • Vice versa, to lower the price of a good one gets others to (mis)anticipate that a (dys)functional quality or characteristic of that good or service that has been scarce more frequently in the past  (according to their [mis]recollection) will, for some reason or other, be scarce less frequently in the future. 

The pricing of a good or a service is one thing, the pricing of a financial instrument is another. For the price of a financial instrument is not a measure of frequency but, rather, it is a measure of the financial instrument’s capacity to modulate frequencies.

• The price of one financial instrument is determined by the frequency modulations that the one financial instrument enables relative to the frequency modulations that other available financial instruments enable.

  • If one wants to pay $5.00 for a pound of tomatoes using a financial instrument that charges a $0.05 fee for a week’s deferral, one must haggle or shop around to get the price down to $4.95 or the price one pays will becomes higher than $5.00, after a week’s deferral. 

  • A financial instrument with a sharp tuning is a financial instrument that heightens prices, just like a musical instrument with a sharp tuning is a musical instrument that heightens pitches. 

  • A financial instrument that sharpens prices to some degree becomes more expensive when other financial instruments that sharpen prices to a greater degree are made available: e.g., credit at relatively low fees and interest rates becomes expensive when credit at relatively high fees and interest rates becomes more widely available.

  • A financial instrument that sharpens prices to some degree becomes less expensive when other financial instruments that sharpen prices to a lesser degree are made available: e.g., credit at relatively high fees and interest rates becomes cheap when credit at relatively low fees and interest rates becomes more widely available.

• As with the pricing of goods and services, the pricing of financial instruments is not an instantaneous price but, rather, involves (mis)recollection and (mis)anticipation. 

  • The price of a one financial instrument  is not determined by the availability of other financial instruments that modulate frequencies differently in the present. Rather, the price is  determined over an interval that includes the past availability and the (mis)anticipated future availability of other financial instruments that modulate frequencies differently.

    • Thus, one can raise the price of a given financial instrument by getting others to (mis)anticipate that financial instruments that sharpen prices relative to the given financial instrument will be more widely available in the future than in the past (according to their [mis]recollection).

    • Vice versa, one can lower the price of a given financial instrument by getting others to (mis)anticipate that financial instruments that flatten prices relative to the given financial instrument will be more widely available in the future than it was in the past (according to their [mis]recollection).