Re: Minsky, FIH, and stability

[Paul Davidson <PB108928%UTKVM1.BITNET@xxxxxxxxxxxxxxxxx>]

FROM:  Paul Davidson
"      Economics Department
"      523 Stokely Management Center     974-4221
Dear Barkley: As I suggested in my response to Steve Keen you seem to have seap
arte theories for Germany than for Japan. But let me ask you why is what you
call "the unexpected costs of reunification" a coordination failure? Why isn't
it simply mistaken expectations?  And to whom were these cost unexpected?
Kohl? IMF? Certainly not the Bundesbank who strongly came out against Kohl's
"artifical" exchange rate between OestMarks and DMs. How do you know that it
wasn't just a nonlinearity?
       Why wasn't the Japanese case one of coordination failures because
someone (who?) did not foresee the collapse of [spot] land values?  Land, being
 aRicardian good, cannot be reproduced by the use of labor. One might expect
with a growing economy for its price to always rise -- not linearly but
logrhytmically according to an Hotelling rule.

If I read you correctly Germany is floundering because it cannot afford the nec
essary total investment required for unification while Japan is starting to
flunder because it is "overshooting" on investment. (Perhaps the solution would
be to move the Japanese economy to West Germany so that they could continue
with their massive investments and move Germany to Japan so they do not have
the strain of too much investment.
    Finally, I think Clower's shoe leather costs idea for money is really
so small a magnitude that you would not want to justify the complex domestic
and international monetary systems  based on minimizing such "transactions cost
s".  Besides with the ubiquitous ATMS everywhere, there is no longer any
shoe leather costs, merely fingertip costs  to keyboard-in one's transactions.
And as soon as ATMs are linked to email -- there will be no transactions costs,

just the tactile pleasures of fingering a keyboard. Paul Davidson

Have a good day!