PKT message, Re: Keynesian Christmas!-- and the collapsing international

I can't say I "get" your point, Alan.

We are talking about currency in pay envelopes to employees in the public sector, actual currency notes in the form of "argentinos." Otherwise, the envelopes will be empty, for the government, due to currency board restrictions, is prohibited from creating pesos. Whatever pesos that had been collected through taxation had been diverted to fulfilling international debt obligations. The new argentino notes are going to be spent and received by the sellers of goods and services. The sellers will presumably deposit them into "argentino" denominated accounts in banks, against which they will write checks made payable to whomever will accept them. Presumably, the government will accept them against tax obligations.

The Argentines are trying to keep their economy going.

What's wrong with that?

"Inflation", in respect of Argentina at the present time, is a red herring. The problem in Argentina right now is deflation. Money has been sucked out of the economy to satisfy foreign debt obligations, leaving nothing for ordinary transactions.

The public sector, even in wastefully bureaucratic Argentina, supplies real value to the Argentine public.

The pubic sector employees deserve to be paid.

And just WHAT does the "holding" of assets have to do with it?

Trade is about the PRODUCTION, DISTRIBUTION and CONSUMPTION of assets, isn't it?

>From: "Alan G. Isaac"

>To:

>Subject: Re: Keynesian Christmas!-- and the collapsiing international

>Date: Sun, 30 Dec 2001 09:25:02 -0500 (Eastern Standard Time)

>On Fri, 28 Dec 2001, Warren Mosler wrote:

> > The new currency will function just fine if it is acceptable for

> > payment of taxes.

>Thought experiment:

>A country introduces two currencies, both of which

>are acceptable in the payment of taxes but one of which has a higher

>expected rate of inflation. (Keep things simple: only these point

>expectations matter for the asset decision.) Who will hold the high

>inflation *currency*?

>As always, expectations are a crucial determinant of asset holding.

>Cheers,

>Alan Isaac