Re: fiscal deficit - Mosler addendum

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

In response to my statement:

> > The 'value of the currency' denotes its purchasing power in terms of
> > non-financial assets - 'secured' federal lending whereby HPM is supplied
in
> > exchange for some other form of money/assignable debt does NOT affect
"the
> > value of the currency".

Warren writes:

> Yes it can.

Comment:

How?

Gunnar

----- Original Message -----
From: "Warren Mosler" <mosler@xxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Tuesday, November 20, 2001 12:13 PM
Subject: Re: fiscal deficit - Mosler addendum


>
>
> Gunnar Tómasson wrote:
>
> > Re. the following:
> >
> > > > So long as the Monetary Authority 'supplies' High Powered Money in
any
> > > > amount 'demanded' by credit-creating institutions for 'clearing'
> > purposes,
> > > > the 'functional monopoly' in question is one of form rather than
> > substance.
> > >
> > > Unlimited, unsecured lending would quickly render the currency
valueless.
> > > 'Secured' federal lending demands collateral in exchange for units of
its
> > > currency
> > > thereby supporting the value of the currency.
> >
> > The 'value of the currency' denotes its purchasing power in terms of
> > non-financial assets - 'secured' federal lending whereby HPM is supplied
in
> > exchange for some other form of money/assignable debt does NOT affect
"the
> > value of the currency".
>
> Yes it can.
>
> w
>
> >
> >
> > Gunnar
> >
> > ----- Original Message -----
> > From: "Warren Mosler" <mosler@xxxxxxxx>
> > To: <pkt@xxxxxxxxxxxxxxxx>
> > Sent: Monday, November 19, 2001 7:57 PM
> > Subject: Re: fiscal deficit - Mosler addendum
> >
> > >
> > >
> > > 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:
> > > >
> > > > So long as the Monetary Authority 'supplies' High Powered Money in
any
> > > > amount 'demanded' by credit-creating institutions for 'clearing'
> > purposes,
> > > > the 'functional monopoly' in question is one of form rather than
> > substance.
> > >
> > > Unlimited, unsecured lending would quickly render the currency
valueless.
> > > 'Secured' federal lending demands collateral in exchange for units of
its
> > > currency
> > > thereby supporting the value of the currency.
> > >
> > > This is covered in more detail in 'A General Framework for the
Analysis of
> > > Currencies
> > > and Other Commodities' at:
> > >
> > > www.mosler.org
> > >
> > > >
> > > > For it reduces the 'functional' role of HPM in monetary management
to a
> > > > level commensurate with that of Candidate Gore's Lockbox in the
> > management
> > > > of the social security system - that of functionless
window-dressing.
> > > >
> > > > 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
> > >
> > >
> > >
>
> --
> Warren Mosler
> Director of Economic Analysis
> III Finance
>
> http://www.mosler.org
>
>
>