Re: Incomes and Exchange rates; part 2

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

Leticia Arroyo Abad wrote:
>
> > 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 11:59 PM

> > As Warren Mosler may point out somewhere along this
> > discussion, so long as the currency has value of any
> > amount, the government does not need taxes or
> > borrowing to pay its bills. It needs these activities
> > only to maintain the currency at a respectable level
> > of value. [i.e. - To prevent unacceptable inflation.]

> OK, but which is the "acceptable inflation" rate for you?

If it were up to me it would be zero. But, unfortunately, there  are
still many who think a little bit of inflation is tolerable and, in some
cases, even desirable.

> I don't think you can "trade off" between money and other
> sources of government expenditure financing methods in
> economies where there is inflationary memory. Once you
> expand the high power money supply without a gold or other
> standard, people will run against their own currency and
> the "acceptable inflation" will not longer be "acceptable".

I think any tolerance for inflation is independent of a recent history
of hyperinflation. The only difference I see between your opinion and
mine is the choice of standard.

			-- jbod
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