Re: Incomes and Exchange rates; part 2

["John B. O'Donnell" <jackodonnell@xxxxxxxx>]

asecon wrote:
>
> I don't get to understand your position. If there are
> "fools"everywhere and they are a lot, so the system
> will hold, underwise it won't.
> What Laura is trying to explain is that in certain
> countries (one example is our own country), people need
> to believe that government is going to do things well,
> that is why fixed rules must be established, in order
> to be sure that we are not going to end in a economic
> disaster. Expectations are mantained calmed by this method.

I agree that fixed rules for government are _VERY_ desirable. It is only
in what the fixed rules should be that I differ.

> ----------
> > De: John B. O'Donnell <jackodonnell@xxxxxxxx>
> > A: POST-KEYNESIAN THOUGHT   <pkt@xxxxxxxxxxxxxxxx>
> > Asunto: Re: Incomes and Exchange rates; part 2
> > Fecha: Martes 16 de Septiembre de 1997 2:57 PM
> >
> > Maria Laura Segura wrote:
> > >
> > > John wrote:

<<SNIP>>

> > Any taxation, not just that of "incomes" [A concept
> > peculiarly defined by U.S. courts that is part of the
> > government practice of obfuscation that confirms the
> > tendency to mistrust government.] can establish value
> > of a fiat currency. Other methods can also  establish
> > value for a currency, but one is enough. And, even with
> > a method of giving currency value, there is still a need
> > for a method to give it a particular value.
> >
> > In logical perception, taxation is sufficient but not
> > necessary to make a currency valuable. It is not
> > sufficient [It lacks the ability to respond sufficiently
> > quickly to changes in value.] to maintain a reasonably
> > constant value of the currency.
> >
> > > That might be the case in the US, but in some countries
> > > where people don't trust there own's government ability
> > > to spend, some external insurance is necessary. In these
> > > cases the backing works as a control measure and restrains
> > > the government from excessive spending (which in most of
> > > the cases is financed through monetary emition and leads
> > > to high inflation rates)
> >
> > There are fools everywhere who trust government but we can be
> > grateful the sentiment is not universal. The only reliable
> > external insurance to constrain the misbehavior of government
> > is the power of the mob when the mob is willing and able to
> > exercise that power. [We can hope that the threat is
> > sufficient and governments do respect that possibility, but
> > they also push the frontier as far as they can without inciting
> > rebellion.]

<<SNIP>>
			-- jbod
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