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

[Warren Mosler <mosler@xxxxxxxx>]

Basil Moore wrote:

> 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.'

Basil,

The single supplier of any commodity/currency is price setter of
'two prices.'  The first is how that commodity exchanges for
more of that commodity, called the 'own rate' by Marshall, I believe.
With a currency the interest rate set by the CB is the own rate.

The second 'price' is how that commodity exchanges for other
goods and/or services.  For example, since the private sector
needs units of the govt's currency to meet its tax liabilities,
and the govt is the only supplier (monopoly supplier of reserves,
as you put it in your 1988 book) of said units, it is clearly 'price
setter' when it spends or lends (re: collateral demanded).

The driving force with a flex exchange rate is the non govt sector
needing the govt's spending or lending to meet its tax obligations.

Best,

Warren

> >
> >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.
> >