Re: Mosler Seminar

["James R. Olson, jr." <jhavok@xxxxxxxx>]

At 08:25 AM 3/4/97 -0500, Warren wrote:

>The dollars, marks, yen, etc. are govt issued tax credits.  If the govt
allows
>others to issue such tax credits, it is the same as simply giving them the
>money.

I understand that.  I was considering state or county tax credits, rather
than federal credits.  Federal credits would be the same as the federal
government issuing the money.  Local tax credits would be independant of
federal money, except insofar as there is a conversion process.

The particular problem of my state is that we depend on federal money to
keep our balance of payments even. (I'm sure this is true of most of the
poor states.)  We have recently lost most of our agricultural export
industry (sugar and pineapple) and the budget cutting craze has cut into
our federal funds.  It seems very important to me to keep as much money in
the state as possible, in order to prevent an a local recession.  The state
government is in a budget crunch, due to the sudden drop in revenues and
the constitutional requirement of a balanced budget.  State layoffs due to
the crunch have added to the problem.  The Feds don't seem inclined to
help, especially since we are historically a Democrat state, and rejected
the Republican carpetbagger in this olast election, despite massive RNC
financing.

On reading Soft Currency Economics crossed with the LETS thread, it occured
to me that the state could act unilaterally by issuing negotiable tax
credits, and control their value by judiciously controlling their number.
In this way, it could finance projects that it didn't have the fedaral
notes for, and also keep a certain portion of its spending inside the
state, since the tax credits wouldn't be negotiable outside it.

The issued tax credits would essentially be future taxes being spent now.
Requiring that a certain portion of taxes be paid in credits, and then
restricting the number issued would keep their market value high.

The hangup is in whether the federal government would consider the tax
credits to be currency, as they are tending to do with LETS.