Re: if money grew on trees, or in the ground

["Lissette Wendy Moreno Villanueva" <wendymoreno@xxxxxxxxxxx>]

H.C.K.LIU:

"Money does not really create money.  Money creates economic activities
which
support the creation of more money."


I AGREE WITH YOU. (NEVERTHELESS I GAVE IT BY UNDERSTOOD)


"  Money is not a commodity.  It is an agent
of exchange with purchasing power and a storer of value.  But these
characteristics of money are not intrinsic and they exist only under certain
conditions. Paul Davidson points out frequently on this list that money is
desirable because and only because it possesses the highest degree of
liquidity.
 If money (such as a particular currency) loses liquidity, its value falls.
Another characteristic of money that is interesting but seldom directly
discussed is that if all market participants have equal amounts of money,
money
tends to lose its liquidity or usefulness.  There was a time in the 1960s,
when
the Chinese economy had perfect equality of income, one of the result was
that
there was no market because money essentially lost its purchasing power. No
one
needed more money and economic activities stagnated.  On the other hand, if
all
the money in an economy belongs to one person. money also loses its
liquidity by
definition.  Thus income disparity is simulative up to a certain extend,
after
which either to much or too little disparity will contract the market.

Henry C.K. Liu

Lissette Wendy Moreno Villanueva wrote:

> Money creates money.  Maybe it is not necessary to have a "big dad"


Yor examples are really interesting to me.

The income distribution is one of the meaning factors in the reactivation of
demand (consumption,- and here I make reference to the demand of production
and its implications over the demand of money, under the assumption that CB
provides money as money is needed).  The variations of the interest rate
will have more effect on high-income people and lower effects on low-income
families. If we reduced interest rates the rate of consumption of hig-income
families would surely rise, nevertheless it is uncertain to know the optimal
rate of interest in any case.
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