Re: controlling capital?

[Paul Davidson <pdavidso@xxxxxxxxxxxxxxxxxx>]

On Sat, 9 Mar 1996, Warren Mosler wrote:

> Just to make sure I am on track with the logic, exactly how is capital and
> flow of capital defined?  For example, real capital flows are the movement of
> real means of production, such the shipment of, say, machine tools from
> the U.S. to Mexico.   If capital refers to the money only, than the term
> "flow" needs to be examined.  For example, if I sell my dollars and buy
> pesos, there is a counter party.  The money is changing hands.  But until
> money is spent on real goods and services, there are no real effects.
>
> Warren Mosler
>
>
This is the same confusion that plagued the dicussions of liquidity
preference in the early 1930s.  After all how can there be a bull market
Warren?  For every bull there must be a bear?  Obviously the fact that
for every buyer there must be a seller does not prevent stock prices
from m oving. What a Tobin Tax is suppose to do is to prevent hot money
portfolio movements between currencies. (This is what is meant by capital
flows in the present discussion.)  It is a question of international
liquidity preferences that can be disruptive to real income and global
employment -- just as liquidity preference s can be disruptive to
employment in a closed economy model.

Paul D.