Re: two currencies and Korean war

["J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>]

William,
      But even in a commodity money system,
a commodity that has become a money will
generally have a higher value than it would
have if it were not a money because of the
extra demand for it as money.  The long
decline in the value of gold is a sign of the long
working out of its de facto demonetization.
      Keynes' original chartalism dealt with
metal monies issued in Babylon.
      I would, however, fully agree that chartalism
is more defensible if it is limited to pure fiat
currencies in the modern world economy.
Barkley Rosser
----- Original Message -----
From: "William F Hummel" <wfhummel@xxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Sunday, January 13, 2002 12:38 PM
Subject: Re: two currencies and Korean war


> Ted Winslow wrote:
>
> >Barkley wrote:
> >
> >> BTW, I have been aware of this personally.  As
> >> recently as 20 years ago, M-T dollars were still being
> >> used by bedouins in the desert of Sa'udi Arabia as a
> >> medium of exchange.  The Badu were very aware at
> >> all times of the world price of silver.
> >> OTOH, one for
> >> the chartalists, I suspect they were usable to pay taxes
> >> there as the Sa'udis were very into silver and some of
> >> them would lose huge sums when the silver bubble
> >> burst.  The Qur'an asserts that money should be specie
> >> and the Sa'udi paper money has silver threads in it.
> >> The Hunt brothers had convinced some of them that
> >> the world would go on a silver standard.  The current
> >> de facto leader, Crown Prince Abdullah reputedly lost
> >> several billion dollars in the crash.
> >
> >These facts contradict "chartalism" in the sense of the claim that the
value
> >of money as a store of wealth derives ultimately from the tax
requirement,
> >don't they?  The valuation of silver by the Sa'udis and the bedouins
didn't
> >derive from its use for paying taxes, rather this use derived from its
> >valuation which, as the connection with the Qur'an indicates, had another
> >basis.
> >
> >My understanding is that blood feuds, jus talionis, blood money and bride
> >price are still characteristic of many Middle Eastern cultures. As I
pointed
> >out earlier, in the psychology consistent with the psychological premises
of
> >Keynes's monetary theory these phenomena are expressions of the same
> >persecutory anxiety as the "strong irrational feelings" about money to
which
> >Keynes points as the ultimate basis of the "desire to hold money as a
store
> >of wealth".
> >
> In my view, chartalism refers to the essential role of taxes in a
> fiat money system, not a commodity money system.  Precious metals
> were commonly viewed as a commodity when they existed as money.
>
> William F Hummel
>