Re: A General Framework For The Analysis Of Currencies...[Was: Re: two currencies and Korean war

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

Warren:

Again, I am inserting brief comments below.

Gunnar

----- Original Message -----
From: "Warren Mosler" <mosler@xxxxxxxx>
To: "Gunnar Tómasson" <gunnar.tomasson@xxxxxxxxxxx>; <pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, January 14, 2002 9:46 PM
Subject: Re: A General Framework For The Analysis Of Currencies...[Was: Re:
two currencies and Korean war


> >
> > *****
> > By definition, "a commodity with 0 cost of production" - Sunshine etc. -
is
> > a "free good" to which economic reasoning does NOT apply.
> > *****
> >
>
> Yes, but that's a slightly different story.  If the sunshine was a public
> monopoly,
> like perhaps water is in some places, the govt could set 'price.'

*****
I don't get it - how does the government set the 'price' at which it buys
Goods and Services with newly issued State Money?

What would prevent non-government buyers of Goods and Services from setting
the 'price' by pooling their demand so that it equalled that of the
government?

*****

> (snip)
>
> >
> > And "why would an INPUT supplier exchange his..." - this is where you
miss
> > my point, namely, that an INPUT supplier has NO "goods and services" to
> > offer in exchange "for units of the currency".  All he has is Factor
> > Services which, if he can find entrepreneurs willing to acquire them,
permit
> > him to translate Factor Services into CLAIMS on Goods and Services.
> >
>
> CLAIMS from the entrepreneur for actual product?  That's a barter
arrangement,
> we were discussing discussing an 'intermediate' floating exchange rate
currency.

*****
My point is this:

The production process is a means of transforming Factor Inputs into Final
Output - Factor Inputs supplied at one end of the process earn the
owner/supplier IOUs/Purchasing Power/Claims on Goods and Services.
*****


>
> > *****
> > (snip)
>
>
>
> >
> > > The law of contract has nothing to do with value, though enforceable
law
> > is
> > > probably fundamental in anycase.  all that states is that debts must
be
> > repaid,
> > > etc.
> >
> > *****
> >
> > "The law of contract has nothing to do with value"?
>
> In the obvious sense that you can have law of contract and worthless
> currency.  As above, law of contract is fundamental to monetary
> relations, but not the 'thing' that mandates value.
>
> >
> >
> > Absent the Law of Contract, what is the "value" of any intrinsically
> > worthless IOU?
> >
>
> As above.  Just like you need water to live before you can talk, you don't
call
> water
> the thing that creates language.
>
> >
> > *****
> > >
> >
> > And IF the state did "tax that stuff directly", THEN - by Chartalist
> > reasoning - the state would remove the very foundations of the Monetary
> > System.
> >
> > Does this make sense to you?
> >
>
> ?   You mean the state would not tax/spend with it's currency of issue?
Then
> it would have no (floating fx) currency of issue.

*****

IF, as suggested by Chartalist Doctrine, 'taxes drive money', THEN "tax[ing]
that stuff directly" would remove from the scene that which 'drives money',
namely, State Money - absent which, the Monetary System would presumably
grind to a halt like a car with an empty gas tank.

Or else State Money does NOT 'drive money' in the fundamental sense
envisaged by Chartalist Doctrine.

Gunnar

> >
>
> w
>
> >
> > Gunnar
>
>