Re: General Theory Seminar--Moore (reply to Mosler)

[Basil Moore <bmoore@xxxxxxxxxxxxxxxxx>]

John
In this context the "price" of money that the Fed sets is the interest
rate. This is the price of credit, which the CB is supplying.
Basil Moore


At 10:18 AM 3/1/00 -0800, you wrote:
>Warren Mosler wrote:
>
><<SNIP>>
>
>> The issuer of the currency (government) is the single supplier of that which
>> it demands for payment of taxes and other debts to the government.  Single
>> suppliers are 'price setters.'
>
>It may only be a matter of email semantics, but the above leaves
>an erroneous impression. The supplier of goods or services can
>not concurrently set both the price and quantity. In the case of
>money "price" is the quantity of goods and services money buys.
>It is not the rental rate or interest charged for temporary use.
>
>To set price a supplier must control quantity; to set quantity
>it must ignore price. It is this characteristic of normal goods
>that makes the Friedman proposition [i.e. A steady rate of
>growth in some measured quantity of "money supply."] an
>impossible  contradiction to the tautological certainty that
>dQ/dM = 0.
>
>While it is true that there is no absolute ratio between any
>measured quantity and a specific price, there is the absolute
>certainty that, like all normal goods, an increase in money
>quantity will reduce its price and a decrease in quantity will
>increase its price. Likewise a decrease in demand for money will
>decrease its price and an increase in demand will increase its
>price. Also, an increase or decrease in the use of money
>substitutes will have the same effect. [A circumstance, like the
>aggregate supply of goods and services, that is  beyond the
>control of the issuer of money.]
>
>The only rational indicator(s) of how much money is the "proper"
>amount is its price in terms of the goods and services it can
>buy.
>
><<SNIP>>
>
>--
>			-- jbod
>
>		Tax Privilege, Not People
>___________________________________________________
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>.
>