Re: Uncertainty and Liquidity Preference

[Paul Davidson <pdavidson@xxxxxxx>]

At 04:22 PM 7/15/99 +0000, you wrote:
>
>>
>So you are saying that in all job contracts money represents labor time
>but in all other types of contracts money represents something else???
>What could be this something else besides labor time??
>


NO!!! I am saying and have been saying that all contractual liabilities are
legally dischargable by the payment of money. Or in other words, State
enforcement of all contracts are in terms of money -- even if you
contractually agree to sell someone apples and you do not deliver what you
said you would, all the buyer can do is sue you in court and if you refuse
to deliver apples, the court can merely force you o pay the buyer the
damages in terms of buying apples.

  If you would read my Post Keynesian Macroeconomic Theory book you would
see that money is defined by two functions and two properties.

The two functions are :
1.THE MEDIUM OF CONTRACTUAL SETTLEMENT. (this is not the same as the
conventional  theory's medium of exchange)
2. A store of value.

The two properties are :
1.Its elasticity of production is approximately zero, i.e., [dlog money
supply/dlog labor]  = zero.; accordingly when the demand for money (or any
liquid asset [see below] increases, entrepreneurs can not hire more workers
to produce additional quantities of money --- In other words, NONEY DOES
NOT GROW ON TREES!!!!
2. Its elasticity of substituion with the producible goods of industry is
zero

All other liquid assets (stocks, bonds, derivatives, etc ALSO POSSESS the
second function (BUT NOT THE FIRST CONTRACTUAL SETTLEMENT FUNCTION) and
they also possess the two elasticity properties.

These elasticity properties were called "The ESSENTIAL Properties" of money
and all liquid assets in Chapter 17 of the GT.

Paul.

How many times must I repeat this???

Paul Davidson
Holly Chair of Excellence in Political Economy
Economics Department -- 523 SMC
University of Tennessee
Knoxville, Tennesseee 37996-0550
email: Pdavidson@xxxxxxx;
phone: (423)974-4221;    fax: (423) 974-1686
http://econ.bus.utk.edu/Davidson.html