Re: patacones

[William F Hummel <wfhummel@xxxxxxxxxxxx>]

Colin Danby wrote:

>I figured this would get the chartalists excited.  As Daniel notes these
>are provincial currencies.  One of the interesting institutional aspects
>of the Argentine case is struggles over spending and credit between the
>federal and provincial levels.  In good chartalist fashion patacones are
>good for paying local taxes, but that does not seem to stop them from
>trading at a discount to the national currency.  The NYT account of a
>couple of weeks back also suggested that patacones were more likely to
>be accepted by shops selling cheap consumption goods.  It's interesting
>that when different currencies circulate you tend to see distinct
>spheres of expenditure or circulation.
>
>I like Daniel's Gresham's law point about how this encourages spending.
>
>Didn't California do something like this several years back, for a short
>time, to pay state workers?
>
>Best, Colin

I don't think the existence of local currencies has any negative
implications for the chartalists.  Local currencies ride piggy
back on the existence of the state currency in this day and age.
No community of any significance can be so isolated in trade with
the wider community that exchange with state currency plays no
role in sustaining the value of the local currency.

William F Hummel