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

[Basil Moore <bmoore@xxxxxxxxxxxxxxxxx>]

Warren

I'm not so sure about your "two price" story.  "Own price" I understand,
although for financial assets it is usually expressed as "own rate".

Since money is generally acceptable in exchange for all other goods and
services, the other price might be
the value of money in exchange for goods, i.e. the real value of money in
exchange  or 1/p. This seems to be your interpretation??

But I am not happy with the story that the price level p is a function of
the quantity of money in the economy. In my vision the supply of money is
passive, and does not directly explain p or pdot. The price level as a
function of the amount of money in the sytem is after all the monetarist story.

I view the price level and the core inflation rate as being determined
primarily by wages, and by the rate of change of money wages relative to
the rate of average labour productivity growth.

Now in your story I think the gov. can set the wage rate as the residual
purcheser of labor, or ELR?

Thatwould of course be a neat way of closing the system. But I don't think
anyone, even you, would argue that that is a good description of how the
wage rate is deternined at present?

Do we have a disagreement?

Best Basil

At 05:35 PM 3/2/00 -0500, you wrote:
>
>
>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.
>> >
>