Gang of 21 Growing and Going

["John Gelles" <jjgelles@xxxxxxxx>]

    The gang8 (21 strong) looks at lower stock prices, a large
    trade deficit, a mighty dollar (able to drift down as yen
    and euo dirft up -- or NOT), financial derivatives moving
    across national borders in a giant game of craps, big debt,
    possible inflation and deflation, etc., and wonders when
    the U.S. authorities in Congress, the central bank and
    executive branch will face a business depression and
    watch transfixed as it raisees unemployment and lowers
    living standards on Main Street. They study 1930 but
    not 1941.

    Of particular interest to the gang8 list is articulation of
    a foundation for a money system able to prevent the
    the events that promt the question, "Where do we go
    from the here and now (with the deflation, debt and
    deficit, etc., above) -- if we want to end up rich,
    green and at peace in a better 'new economy' world."

    The gang knows that money, credit, liquidity, debt,
    etc., is less than half the story -- the "real" economy of
    logistically significant supplies (of food, energy, tools,
    necessities, weapons, etc., ) cannot be bought in
    markets -- until it is produced where a money rich
    nation can buy and benefit from it -- can use it
    systematically to sustain its "real" wealth and power
    to do good for all.

    So I like to approach the gang's love of foundational
    argument with the following:

            "The logical syntax of language is science"
              -- Rudolph Carnap circa 1930.

            "Money is a language:
             The logical foundation of money is logistics."
              -- John Gelles circa now.

    If there were no time (and all trade were done on
    an instant exchange basis,) there would be no need
    of money.

    If there were no change of stuff over time, and all
    barter could be forseen with respect to the future
    delivery of exchanged specific stuff, there would also
    be not need of money:  promised specific deliveries
    would be sufficient.

    Money, then, represents future "general" delivery of
    "non-specific stuff" of measured value in relation to
    an original bargain.

    Since one can bargain an exchange of anything
    for anything else, the money supply (in a perfect
    system -- that never ran short of money -- and
    never had too much in banks and matresses) would
    measure the "real" wealth of the world in "units
    of money" (whether or not tangible currency and
    recorded bank credits) added up to the same
    total as the potential wealth exchanges.

    In fact, we can be sure they will not.

    So how much money can lenders lend and
    governments (and others) spend? As much
    as they want.

            The only effect will be changes in price
            of actual stuff, actually bought and sold.

    Can price deflation ever again present a real
    problem? Of course not. Not IF government
    spends enough. Spending by governments
    (or anyone with lots of money) ends deflation.

    Can price inflation present a real problem?
    Of course it can!  Inflation can destroy a money
    based economy and force people back to barter
    -- and all the inefficiencies that threatens.

    Are computerized barter systems compatible with
    innovative free enterprise?  Yes. But they will
    take a lot of time and talent to develop. Living
    standards may not be sustainable IF money fails
    to motivate mental and physical work.

    Can we avoid extreme inflation in peacetime the
    way it's done in war? Yes we can.  And we will
    if it comes to that. 1941, not 1930, rules.

    So the gang8 is worrying over something that
    will never happen. Inflation will be contained
    by supply, saving, and taxes. The harder part
    today is taxes -- and we've already got that
    system in place. Systems development for
    better supply and savings are on their way.

    All of which is not to minimize the threat of
    mad cow disease, aids, nuclear proliferation,
    terrorists, murderers or busted school systems.

        John Gelles  www.1944.org


----- Original Message -----

From: Gunnar Tomasson <tomasson@xxxxxxxx>
To: POST KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
Sent: Wednesday, December 27, 2000 5:32 AM
Subject: Fw: Where Do We Go From Here?


The following Gang8 exchanges may be of interest to PKTers.

Gunnar

[ see Original Message for more ]