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

[Basil Moore <bjm@xxxxxxxxxxxxxxxx>]

Henry
Very interesting. Why do you think the Japanese consumer refuses to spend,
when ST interest rates are close to zero??
Saving and consumption are both learned behavior. Saving behaviorally means
consuming less. I have a paper explaining this as due to the continual fall
in land prices in Japan since 1990. Attached. Comments appreciated.
Basil





At 11:10 AM 3/9/01 -0500, you wrote:
> Basil,
>
> The effect is supported by empirical data.  But of course it is very
> complex and
> the causal effeccts can be debated.  One reason may be the equality of money
> distribution precludes purchasing of luxuries which are the driving force for
> economic expansion. Consumption is also a learned behavior.  When the
> Third Reich's
> Keynesian policy began to work, the German workers were not spending their
> income.
> The government had to launch a zest for living- spending is good citizenship
> program to get the income circulating.  The prime role of the British
> royalty is to
> stimulate the bourgeoisie into spending their income to ape royal life styles.
>
> It is an area that need more attention. Notice how advertising is always
> designed
> to drive the consumer towards bankruptcy.
>
> Henry
>
> Basil Moore wrote:
>
> > Henry
> > I do not see why if income were equally distributed money would loose its
> > usefulness or its purchasing power?
> > It may be that if the government equalizes income, no one would choose to
> > work? But that is about incentives, and not about the properties of money.
> > Basil Moore
> >
> > At 11:07 AM 3/8/01 -0500, you wrote:
> > >Money does not really create money.  Money creates economic activities
> which
> > >support the creation of more money.  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"
> > > > government creating employments just because, but an STRONG
> government with
> > > > an strong financial structure to generate good macroeconomic
> perspectives.
> > > >
> > > > It is not needed labor to "produce" money, but Labor is needed in the
> > > > productive process, and employees are needed to demand
> production.  How can
> > > > we start the virtuous cycle?.
> > > >
> > > > >From: "Canova, Timothy" <CANOVA@xxxxxxxxxxx>
> > > > >To: "'pkt@xxxxxxxxxxxxxxxx'" <pkt@xxxxxxxxxxxxxxxx>, Lissette
> Wendy Moreno
> > > > >Villanueva <wendymoreno@xxxxxxxxxxx>
> > > > >Subject: RE:  if money grew on trees, or in the ground
> > > > >Date: Wed, 7 Mar 2001 15:52:11 -0700
> > > > >
> > > > >From the General Theory:
> > > > >
> > > > >"'To dig holes in the ground,' paid for out of savings, will
> increase, not
> > > > >only employment, but the real national dividend of useful goods and
> > > > >services.  It is not reasonable, however, that a sensible
> community should
> > > > >be content to remain dependent on such fortuitous and often wasteful
> > > > >mitigations when once we understand the influences upon which
> effective
> > > > >demand depends."  (page 220)
> > > > >
> > > > >"If the Treasury were to fill old bottles with banknotes, bury them at
> > > > >suitable depths in disused coal-mines which are then filled up to the
> > > > >surface with town rubbish, and leave it to private enterprise on
> > > well-tried
> > > > >principles of laissez-faire to dig the notes up again (the right
> to do so
> > > > >being obtained, of course, by tendering for leases of the note-bearing
> > > > >territory), there need be no more unemployment and, with the help
> of the
> > > > >repercussions, the real income of the community, and its capital
> wealth
> > > > >also, would probably become a good deal greater than it actually
> is.  It
> > > > >would, indeed, be more sensible to build houses and the like; but
> if there
> > > > >are political and practical difficulties in the way of this, the above
> > > > >would
> > > > >be better than nothing."  (page 129)
> > > > >
> > > > >
> > > > >
> > > > >-----Original Message-----
> > > > >From: Paul Davidson [mailto:pdavidson@xxxxxxx]
> > > > >Sent: Wednesday, March 07, 2001 2:37 PM
> > > > >To: Lissette Wendy Moreno Villanueva
> > > > >Cc: pkt@xxxxxxxxxxxxxxxx
> > > > >Subject: Re:
> > > > >
> > > > >
> > > > >At 10:58 PM 3/6/01 +0000, you wrote:
> > > > > >Money does not grow on trees, but it does as if...
> > > > > >when someone decides to save some money at banks for example,
> can get x%
> > > > > >of financial interest without moving a hand.
> > > > >
> > > > >NO -- you misunderstand  -- if money did grow on trees then there
> would be
> > > > >a need to hire labor to harvest the money trees (just as farm  workers
> > > pick
> > > > >oranges in California ) and any increase in the  demand for money
> to hold
> > > > >as a store of value would create a demand for more farm workers to
> plant
> > > > >and harvest more money trees.
> > > > >
> > > > >Paul
> > > >
> > > >
> _________________________________________________________________________
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