Re: SV: SV: elr and mosler/censorship

[Warren Mosler <mosler@xxxxxxxx>]

At 04:51 PM 3/8/97 +0100, you wrote:
>Thanks for going in here, Warren. I am not entirely confident that you got
>my point, though. 
>
>First, the liquidity of a 30-year bond to a particular individual is not
>the same thing as its 'social' liquidity. one individual can always sell an
>illiquid asset for money, provided there are other individuals that accept
>to go illiquid.

Yes.  And the world could theoretically get buy without desiring
any H(nfa).  For example, the H(nfa) for confederate money is 
very low.  But it is this 'hoarding' desire of the unit of account 
beyond that provided by deficit spending that is evidenced
by unemployment.  Of course, unemployment is defined as 
individuals attempting to exchange their labor for $. 


 In the aggregate, however, the stock of long-term bonds
>cannot be 'liquified' unless government (or private banks) intervene as
>buyers.
 This, I believe, is a central point of the Keynesian theory of
>liquidity preference. 

Ok.  That is nothing more than saying that once created and sold,
someone is going to hold them each day they exist.  That is true of 
anything?  
>
>Second, the net financial position of the private sector (in a closed
>system) cannot be changed without a mirror image change of the government
>position.

Yes.

 But the quantity of money can be changed without any change at
>all in the government position. The private sector (banks) can create
>short-term liquid debt, money that is, as a completely 'internal' affair.

Yes.  'Gross' financial assets can expand virtually without limit.
One party goes 'long' dollars, and another goes 'short.'  We call
the 'longs' 'money.'  

>The crucial point as to the ELR propositions here, is whether people work
>for *money* wages or for 'financial assets wages'. I claim that people work
>for money wages, but it seems to me that the FEAPS is claiming that people
>work for any financial asset compensation. Did I get this wrong? 

Incomplete.  People work for $, but those $ must come from 
someone else reducing their $.  Borrowing to pay wages, for
example, is a reduction of net $ for the borrower.   

Involuntary unemployment will exist when the non-govt sector,
in aggregate, desires to net save financial assets, including cash,
for example, beyond that allowed by fiscal policy.

There is a 'leap' here from micro to macro.  Any one unemployed 
worker may be willing to spend his income and not net save.  
But to pay that worker someone must be willing to reduce his
$ first, for example.  This leads to the concept of 'pump priming'
by govt., for example.  The elr would do that automatically, and
also provide an automatic stabilizer in the other direction of 
some degree. 

Thanks,

Warren  
>
>My PK-est regards, 
>
>Per
>
>----------
>Från: Warren Mosler <mosler@xxxxxxxx>
>Till: POST-KEYNESIAN THOUGHT   <pkt@xxxxxxxxxxxxxxxx>
>Ämne: Re: SV: elr and mosler/censorship
>Datum:  den 8 mars 1997 13:37
>

>

Warren B. Mosler 
Director of Economic Analysis
III Finance

See: 

"Soft Currency Economics"
=========================
http://inca.gate.net/~mosler/softecon.html