Re: imcu questions

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

Warren:

Re. the following exchange between Paul Davidson and you:

> Again thia lain of yours is just not compatible with the essential
properties
> of interest and  money (ch 17 of the GT) which assures that
instantaneously
> flexible relative prices (including exchange rates) can not assure full
> employment---
>
> GOES WITHOUT SAYING!
> TO COMPLETE MY ABOVE STATEMENT,
> WITH A FLOATING EXCHANGE RATE THE GOVT
> CAN ALSO ALWAYS HIRE DIRECTLY OR FUND THE
> DIRECT HIRING OF ANYONE WILLING AND ABLE
> TO WORK WITHOUT REGARD TO GOVT 'FINANCE.'

Comment:

The purely technical considerations which validate the proposition that
"with a floating exchange rate the govt can also always hire directly or
fund the direct hiring of anyone willing and able to work without regard to
govt 'finance'" would also validate the alternative proposition that:

THE GOVT CAN ALSO ALWAYS PROVIDE INCOME SUPPORT TO THE UNEMPLOYED, EITHER
DIRECTLY OR INDIRECTLY, WITHOUT REGARD TO GOVT 'FINANCE'.

And what does either alternative mean in practical terms?

Briefly, with a regime of flexible exchange rates, the U.S. Government need
not worry about the balance of payments impact of placing newly created
money at the disposal of the unemployed through either (a) make-work, or (b)
welfare progams.

And, in technical terms, what does THAT mean?

It means that newly created purchasing power placed in the hands of the
unemployed will secure for them a piece of the pie at the cost of those who
provided factor inputs to the baking of the pie - in other words, it is
INCOME REDISTRIBUTION by monetary/govt. finance means.

Gunnar.