Re: fiscal deficit

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

----- Original Message -----
From: "Warren Mosler" <mosler@xxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, November 19, 2001 8:04 PM
Subject: Re: fiscal deficit


>
>
> Gunnar Tómasson wrote:
>
> > Re. the following:
> >
> > > A currency with a floating exchange rate 'works' because it is
> > > functionally a (public) monopoly. The state/issuer controls the
> > > 'supply' via spending/lending and the 'demand' via taxes, fees, etc.
> > > payable in its currency of issue.
> >
> > Comment:
> >
> > This bird's-eye view of The State Theory of Money highlights its
essential
> > inadequacy as an approach to monetary analysis.
> >
> > It represents 'the state/issuer' as controlling the 'supply' of and
'demand'
> > for money AS IF credit arrangements between Entrepreneurs and Suppliers
of
> > Factor Services were not the pre-eminent form of 'supply' and 'demand'
for
> > money in entrepreneurial market economies.
>
> No it doesn't.

It does too!


>
> >
> >
> > The State's role in establishing and/or regulating the legal and
> > insitutional framework within which such credit arrangements are
effected is
> > to the essence of monetary analysis as its role in establishing traffic
laws
> > would be to analysis of traffic patterns.
>
> Obviously.
>
> >
> >
> > The fact that The State itself may act and/or operate within such legal
and
> > institutional frameworks is of secondary rather than primary importance.
>
> 'Importance' for what???

For monetary theory and analysis.

G

>
> w
>
> >
> >
> > Gunnar
> >
> > ----- Original Message -----
> > From: "Warren Mosler" <mosler@xxxxxxxx>
> > To: <pkt@xxxxxxxxxxxxxxxx>
> > Sent: Sunday, November 18, 2001 12:29 AM
> > Subject: Re: fiscal deficit
> >
> > >
> > >
> > > Gunnar Tómasson wrote:
> > > >
> > > > Re. the following:
> > > >
> > > > > (1) The notion that the value of the currency is determined by the
> > prices
> > > > > government pays strikes me as circular or tautological.
> > > >
> > > > Agree - the like argument applied to money in the form of IOUs
issued by
> > > > entrepreneurs to suppliers of factor services is that the value of
such
> > > > money/IOUs is determined by the prices paid by entrepreneurs (i.e.,
the
> > > > nominal value of their IOUs issued by entrepreneurs to suppliers of
> > factor
> > > > services).
> > > >
> > > > Gunnar
> > > >
> > > The single supplier is necessarily 'price setter.'
> > >
> > > A currency with a floating exchange rate 'works' because it is
> > > functionally a (public) monopoly. The state/issuer controls the
> > > 'supply' via spending/lending and the 'demand' via taxes, fees, etc.
> > > payable in its currency of issue.
> > >
> > > It's all elementary micro stuff.
> > >
> > > see 'A Framework for the General Analysis of Currencies and Other
> > > Commodities'
> > > and 'Full Employment AND Price Stability' at www.mosler.org
> > >
>
> --
> Warren Mosler
> Director of Economic Analysis
> III Finance
>
> http://www.mosler.org
>
>
>