Re: Mosler seminar: Tax-driven currency and the motives for credit

[bill mitchell <ECWFM@xxxxxxxxxxxxxxxxxxx>]

>
>The basic motive for the transaction is a disparity in
>net worth as compared to the needs and uses of the
>two parts. The lender owns more than he can use; the
>borrower owns less than he can use. So, there is
>clearly an economic potential here: welfare is increased
>by the credit transaction. That, I think, is the chief motive
>for credit, the basic reason why there is a "gross".
>
>The net can easily be invoked as a "disequilibrium"
>between the lending and borrowing conditions. Since the
>net must be reflected by the "mirror" of the public debt
>(less the foreign debt in the open economy setting),
>the demand for the currency (including "stored currency")
>may well be analysed in completely different terms than
>future expected taxation.
>

Dear Per

and if the govt raised the tax demand?
the offer of credit (via the intermediary) would decline.

the fact that people have currency in excess of
current tax obligations does not justify concluding that
their tax obligations do not motivate the demand to acquire
money.

further, if there was no mortgage or private credit market
what would happen to the return if their were no govt bonds?
(just an aside)

kind regards
bill


--
         ####    ##        William F. Mitchell
       #######   ####      Head of Economics Department
     #################     University of Newcastle
   ####################    New South Wales, Australia
   ###################*    E-mail: ecwfm@xxxxxxxxxxxxxxxxxxx
   ###################     Phone: +61 49 215065
    #####      ## ###      Fax:   +61 49 216919
                  ##       Mobile: 0419 422 410

WWW Home Page: http://econ-www.newcastle.edu.au/economics/bill/billeco.html