Re: FW: Re: Re: sinking Argentina

["Romain Kroes" <romain.kroes@xxxxxxxxxxxx>]

Very interesting and relevant subject of controversy, Jim.
But is the "forced circulation" of fiat money a reality? If it were, general
level of prices would be immutable. Unless you believe in the "quantity
theory". Do you? If yes, it is another controversy. On the other hand, if
people don't trust a fiat money, nobody can force them to use it. They use
another one. I think that the problem lies elsewhere.
What can be forced is not the circulation but the full-discharge payment. In
other words: the account unit of the debt. Fiat money enables producers to
reflect all increasing costs of production in their prices of production
and, this way, to pass additional cost on to the creditors. What the ancient
monetary units like raw materials, grain, silver and gold did not allow,
because of the "scarcity" you mention and define, that is to say they did
not allow to restore relative prices when upstream prices increase. So that
monarchs and oligarchs were periodically lead to purge the debt (as
reflected in Ancient Testament, by the "jubilee"). But in both cases,
recurrent moratoriums or full-discharging fiat money, the purge of debt is a
destruction of financial capital. And this is, I think, the reason why fiat
money is seen as "forced".
Therefore, the problem is the one of debt a world money has first to be
related to. It is matter of a full-discharging world money that depends, I
agree with you, on the kind of economy which gets hegemony. If hegemony was
of say oil-producers countries, world money would be oil or any currency
related to oil. As hegemony is of an oil importer, world money is a fiat one
that allows to govern relative and real prices between oil and final goods
and services. So, the only way of getting out of monetary crises is an
agreement between countries according to which every country may pay its
debt in any convertible currency, but its own. The BIS can manage that. But
that poses the problem of getting rid of asymmetric exchanges and of all
kind of imperialism, when even UNO has become an instrument of occidental
empire. Has it not?

Romain Kroës

----- Original Message -----
From: "Devine, James" <jdevine@xxxxxxx>
To: <pen-l@xxxxxxxxxxxxxxxxxxx>
Sent: Tuesday, January 08, 2002 5:55 PM
>Subject: [PEN-L:21223] FW: Re: Re: sinking Argentina


> (By mistake, I didn't send the following to the list.)
>
> It's useful to get beyond what a world money _should_ be like and talk
about
> what it is.
>
> I agree with the implication of Marx's theory of money that unlike with
the
> use of a money such as gold that's naturally scarce (i.e., involves labor
to
> produce), the circulation of fiat money within a country must be "forced."
> That is, governmental power is needed to preserve the value of paper money
> (relative to its cost of production), so that its supply is limited and it
> is acceptable in exchange. (States that fall apart due to civil wars,
etc.,
> typically suffer from hyperinflation, as the fiat money's value goes to
> zero.)
>
> That implies that a "world money" requires a world _state_. This in turn
> implies that the hegemony of the dollar since World War II is based on the
> US military, economic, and financial hegemony -- and that any future world
> money will have to be based on some similar hegemony, perhaps of another
> country.
>
> -- Jim Devine