Re: Balanced Budget and Depression

[John Gelles <jjgelles@xxxxxxxx>]

On Thu, 1 Feb 1996 Warren Mosler wrote:

	[Perhaps in defense of federal deficits, but
	 certainly in defense of his theories:]

	> Any increase in Treasury balances at the Fed
	> is a reserve drain.  Any decrease is a reserve add.

	> The commercial banking system's balance must be
	> maintained or the interbank rate will go immediately
	> to zero bid if an excess persists,  or will skyrocket
	> to whatever banks will pay for overnight money,
	> rather than fail.

	> I believe this is standard post Keynesian monetary
	> analysis.


	Warren must spell this mechanism out in "MOSLER FOR
	DUMMIES".  In his longer version of all mechanisms
	necessary to solve the budget controversey in the
	USA, Warren indicates some Nobel Prize economists
	also need to read "MOSLER FOR DUMMIES", along with
	other books in the series to get them on the net.

	Take your time Warren.  Milton Mayer took 40 pages
	to describe how a check for ten bucks proceeds to
	and thru a clearing house.  I tend to believe Warren
	is right about modern banking needs:  If we can
	also be right about modern production, logistics,
	accounting, etc., we may get this show on the road.

	This weeks New Yorker describes how abstract
	thinkers come to grips with the leading liberal
	questions of our time -- in France!  After reading
	and loving it, I take back all my wrongful attacks
	on the PHD's on this list.  Read it.  You'll love it.
	Page 32, New Yorker, Feb 5, "Paris Journal", by
	Adam Gopnik.

	John Gelles