Re: Uncertainty and Liquidity Preference

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

Paul Davidson writes
http://csf.colorado.edu/forums/pkt/spring99/msg01316.html

"Money is, by definition of an entrepreneurial economy...the liquid
asset...that settles contracts.  Thus, in any economy in which the law
of contracts is important, then the government which is required to
enforce the civil law of contracts determines what is money--Money is
therefore a CHARTALIST institution."

Contracts calling specifically for monetary payments are frequently
settled by the tendering of checks or other devolved forms of credit
arrangements not strictly defined as money.

The fact that some forms of money may be declared by the government to
be legal tender does not make money fundamentally a "chartalist" or
"cartalist" institution.

The legal tender law states that if a creditor refuses to accept legal
tender in payment of a debt, the debt is cancelled.  The law does not
require the creditor to accept only legal tender.  He may accept
anything whatever that is mutually agreed between the parties.

The Internal Revenue Service itself greatly discourages the payment
of taxes with legal tender.  Checks are more convenient for the taxman
and the taxpayer.

Even where there has been a judgement entered by a court of law
mandating a monetary payment, most such judgements are eventually
settled by the payment of something other than legal tender, if
monetary payment is made at all.

"Thus," in any economy in which the law of contracts "is important,"
where the parties themselves are free to determine the terms of their
own contracts--is an economy in which the parties themselves determine
the means of settlement.

It is the essence of free enterprise.

Bill Ryan
http://www.geocities.com/CapitolHill/Senate/7018
william_b_ryan@xxxxxxxxxxx






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