SV: elr and mosler/censorship

["Per Gunnar Berglund" <pgb@xxxxxxxxxxxxxxxxxx>]

Mason,

You are perfectly right about the real savings matter. Distinction between
real and financial savings is crucial as every PK-er should recognise.
Every PK-er also ought to recognise the important difference between
financial assets in general and (credit) money, the latter being a subset
of the former. Maybe the Mosler approach would gain in precision by
bringing out this difference and clarifying its implications.

The private sector's desired financial savings (or H(nfa) as Mosler has it,
using somewhat home-cooked terms) is *not* the same thing as the private
sector's desired money hoarding. The financial asset portfolio may include
long-term debt, i.e. 30-year treasury bonds, which are even less liquid
than many real assets. (Credit) money must denote the *liquid* part of the
financial assets, i.e. short-term bonds, cash and check-account deposits.

The private sector's financial asset desire may be satisfied by acquisition
of long-term debt, leaving the (government borrowing part of) the money
stock more or less unchanged. Apart from this, private banks can issue
money at will by extending their balance sheets, the only restriction being
the legal reserve requirement, which is a condition imposed by man and not
a natural law. Some countries have abandoned reserve banking, which does
inhibit the workings of the 'money multiplier', and ensures that the
quantity of money is limited only by the 'supply price' of borrowing money,
i.e the rate of interest. Vide Wicksell's "Interest and Prices" and also
Basil Moore's brilliant "Horizontalists and Verticalists".

Over to the real assets question: Most of these assets are, in some way,
valued on the second-hand asset markets. For instance, I gather you are
able to estimate (approximately) the potential sales value of your own
home. The chief trouble is not the money value of the capital stock, but
how to split this value in price-level and volume dimensions. Now, this is
not a matter for grandpa at this stage. I do admire the ambition to explain
economic matters in a language that everyone can understand. But this
ambition must not be driven so far that it bars scientific discussion and
progress. Some details of this god-forgotten subject is expert stuff, of
which grandpa will have to make do with a rough understanding.

Kindly,

Per

Per Gunnar Berglund
Lilla Sällskapets väg 60
S-127 61  SKÄRHOLMEN
SWEDEN
Phone/fax +46-(0)888 3065

----------
> Från: Mason A. Clark <masonc@xxxxxxxxxxxxx>
> Till: POST-KEYNESIAN THOUGHT   <pkt@xxxxxxxxxxxxxxxx>
> Ämne: Re: elr and mosler/censorship
> Datum:  den 8 mars 1997 09:31
>
> At 04:07 PM 3/6/97 -0700, you wrote:
> >on elr
> >after warren's post, i finally saw what mason was getting at; it was
> >then corrected by bill m. mason wondered if "we" were arguing that
> >only govt can provide for net private sector saving.
>
>   Well, actually, I'm sitting under the roof of a substantial
>   part of my "savings".  The suggestion that I'm a naughty boy
>   for not saving enough - cause roofs don't count - bothers me.
>   Must I collect government paper to be a "true saver"?
>
>   I understand that money is not neutral.  That said, I sense
>   perhaps wrongly, that real objects - especially those not
>   "on the market" are not given much recognition in economic
>   theory.  An example: in Social Security worries, the huge
>   pile of things and inventions we are leaving to our grandchildren.
>   This huge pile, lacking market evaluation, seems to be ignored.
>   This being ignored in the books makes re-educating grandpa
>   difficult.
>
>        Mason
>
>   Can I teach grandpa about "volume measures"?
>