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

[mike sproul <msproul@xxxxxxxx>]

Warren:

> Tsy secs are an 'account' at the Federal Reserve Bank as are reserves
> (clearing balances).  The difference is that Tsy secs offer an interest rate
> and have a
> maturity.  This is functionally the same as a commercial bank offering
> checking accounts and savings account.  Note that as it 'offsets operating
> factors'
> the Fed is offering interest bearing accounts (tsy secs) as an alternative
> to non interest bearing deposits (reserves).

>The word "functionally" is a great peacemaker here, since to an accountant a T-security is not the same thing as money at all. Treasury securities are an ASSET to the fed and (fed-issued) money is its LIABILITY. If we view money as being backed, then money issued by the fed has value because of the backing (t-securities, gold, etc.) held by the fed. But I suppose we are too far apart on this issue to really connect. Just to clarify my original assertion: Money issued by the fed has value because of the backing held by the fed. Derivative money issued by private banks  (and individuals) has value because of the backing (mortgages, cash, etc.) held by those banks. This at least agrees with your statement that the quantity of (base plus derivative) money does not affect its value.
> 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.'
>
> >
Are you actually saying that money has value because the government
accepts it for taxes? Or was this just a careless statement?

Best,

Mike Sproul