Re: More money or better distribution?

["William B. Ryan" <william_b_ryan@xxxxxxxxxxx>]

1.  John Legg writes:  http://csf.colorado.edu/mail/pkt/aug98/0190.html

"In the particular case of full employment of labor and capital...an
increase in the quantity of money would pass more or less directly
through to prices without affecting physical output."

In an economy that has developed purely through endogenous finance, an
increase in the quantity of money at full employment can only come about
exogenously.  This theory of price inflation possibly may explain the
Keynesian bias in favor of traditional debt and silence on the concept
that fiat money can be a tool for social justice.

But concludable from the A + B theorem is the proposition that an
economy exclusively based on endogenous finance (even though it may have
attained full employment) must be operating far below technical
efficiency.

Non-inflationary monetization requires that endogeneity be moderated as
greenbacks, or their digital equivalent, are spent into circulation.

2.  To John O'Donnell:  http://csf.colorado.edu/mail/pkt/aug98/0204.html

You write, "The meaning of dQ/dM = 0 is that they are_NOT_ functionally
related."

Then please don't express your concept as dQ/dM, which in conventional
notation signifies that there IS a functional relationship, partial or
otherwise.  Although you obviously can manipulate calculus, you
apparently do not have the foggiest notion as to its fundamental
principles.

In standard notation, dQ/dM = 0 means that Q is a function of M where
the dependent variable Q does not change throughout the range of the
independent variable, M, because of changes of M.  It does not
necessarily mean that if M is determined to be a dependent variable of
Q, it will not change throughout of range of Q because of changes of Q.

In calculus and in science in general, one must determine what is the
dependent variable, and which is the independent variable, or if they
are interdependent.  It is also possible that there is no functional
relationship whatsoever, in which case the use of calculus is not
appropriate.  These are empirical determinations, subject to
verification or falsification.

Since it is YOU who claims that the relationship is NOT functional, it
is incumbent upon you to explain the strong statistical correlation
between Q and M, as demonstrated by such eminent economists as Friedman
and Schwartz in their ~A Monetary History~, and Basil Moore, a sometime
contributor to this list, in ~Horizontalists and Verticalists~.

You have admittedly not read the "Austrians," those who follow Mises and
Hayek, so I will help you by telling you the gist of what they would
say:

"We define inflation not in terms of the price level, but as any
increase in the quantity of money.  Q and M are correlated because they
are historical facts.  When the population increases, the number of
cancer cases increase.  Inflation, like cancer, is something to be
exterminated."

That's their explanation.  What is yours?

http://www.geocities.com/CapitolHill/Senate/7018/





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