Re: Mosler seminar: Tax-driven currency

[Per Gunnar Berglund <pgb@xxxxxxxxxxxxxxxxxx>]

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In reply to Bill Mitchell:=20

Thanks for comments, Bill. My reply follows below:=20
___________________

Bill wrote: =20
> I disagree with this view. You could have added another nation - =
turkey.
they have no trouble turning over state debt in a high inflation =
environment.<=20

[Per Gunnar Berglund] =20
I think this is slightly beside the point. The point is not the =
technical one of rolling over the debt. The State never gets illiquid in =
its own currency, that is indisputable, and so far you are perfectly =
right. I was rather driving at the maintenance of the value of the =
currency, which I think is limited by the public's readiness to hold =
government debt. One of the strongest points of Warren's view, I think, =
is that it puts fiscal policy in the driver's seat when it comes to =
maintaining the value of the currency. This is quite different from the =
usual view, where the central bank is supposed to keep inflation low.=20

The basic point I tried to make, however, was that the view that the =
currency is tax-driven, and _only_ tax-driven may be too limited. There =
may be other motives besides taxation to hold "stored" currency (i.e. =
government debt). Indeed, I think that future expected taxation provides =
too weak an incentive to account for the substantial amounts of stored =
debt in e.g. Italy, Belgium or even the United States (where taxpayers =
are willing to hold nearly two years' worth of taxes in storage). The =
question is the motive for the Moslerian H(nfa). I don't think taxes is =
enough to explain the relatively high observed H(nfa) in many countries. =


Best,=20
Per

Per Gunnar Berglund
_______________________________________________________________
Snailmail: Lilla Sallskapets vag 60, SE-12761 Skarholmen, Sweden
Voice/fax: +46-(0)8-88 30 65
Website: =
http://csf.colorado.edu/pkt/pktauthors/Berglund.Per/Mainpage.htm

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