Re: imcu questions

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

Re. the following:

> Then how would our friends Gunnar and Warren respond to the following?
>
> "If the Treasury were to fill old bottles with banknotes, bury them at
> suitable depths in disused coalmines which are then filled up to the
> surface with town rubbish, and leave it to private enterprise on
well-tried
> principles of laissez-faire to dig the notes up again (the right to do
> so being obtained, of course, by tendering for leases of the note-bearing
> territory), there need be no more unemployment and, with the help of
> the repercussions, the real income of the community, and its capital
> wealth also, would probably become a good deal greater than it actually
> is.  It would, indeed, be more sensible to build houses and the like;
> but if there are political and practical difficulties in the way of this,
> the above would be better than nothing."

Comment:

On this point I agree with (a) James Mill and David Ricardo's conclusion to
the effect that Final Demand Inflation by burial-and-recovery of money
translated into factor incomes would inflate final output prices; and with
(b) Bentham's conclusion that output/wealth would increase if the money were
used by entrepreneurs to purchase factor inputs for the production process.

> Keynes is making the point here that the community's real income and
> capital wealth may be increased by the mere fact that more money is placed
> into circulation that is not "costed" into real production.  Certainly
> digging up old bottles is not real production but complete waste.  The
> same effect could be accomplished more rationally by handing out banknotes
> without the waste.

Comment:

In the quoted passage, Keynes fails to distinguish between alternative
"first uses" of the buried-and-recovered" money, namely, (a) its use to
purchase final output, and (b) its use to purchase factor inputs for
production.

As underscored by Bentham in the early 1800s, only (b) would increase the
"community's real income and capital wealth".

> The point is in diametric opposition to Say's Law.

Comment:

Neither conclusion - Mill/Ricardo's or Bentham's - has any bearing on Say's
Law.

Gunnar



----- Original Message -----
From: "William B. Ryan" <william_b_ryan@xxxxxxxxxx>
To: "Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>
Cc: <mosler@xxxxxxxx>; <pkt@xxxxxxxxxxxxxxxx>; "Gang8"
<gang8@xxxxxxxxxxxxxxx>
Sent: Monday, June 03, 2002 11:43 AM
Subject: Re: imcu questions


> Referencing http://www.geocities.com/new_economics/mosler-06-02-02
>
> [Tomasson]
>
> 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.
>
> [Mosler]
>
> Yes!
>
> Simply handing out checks is income redistribution, while hiring for
> pay presumably increases national output as the newly employed provide
> services etc.
>
> -----
>
> Then how would our friends Gunnar and Warren respond to the following?
>
> "If the Treasury were to fill old bottles with banknotes, bury them at
> suitable depths in disused coalmines which are then filled up to the
> surface with town rubbish, and leave it to private enterprise on
well-tried
> principles of laissez-faire to dig the notes up again (the right to do
> so being obtained, of course, by tendering for leases of the note-bearing
> territory), there need be no more unemployment and, with the help of
> the repercussions, the real income of the community, and its capital
> wealth also, would probably become a good deal greater than it actually
> is.  It would, indeed, be more sensible to build houses and the like;
> but if there are political and practical difficulties in the way of this,
> the above would be better than nothing."
>
> Keynes is making the point here that the community's real income and
> capital wealth may be increased by the mere fact that more money is placed
> into circulation that is not "costed" into real production.  Certainly
> digging up old bottles is not real production but complete waste.  The
> same effect could be accomplished more rationally by handing out banknotes
> without the waste.
>
> The point is in diametric opposition to Say's Law.
>
>
> --
> William B. Ryan
> william_b_ryan@xxxxxxxxxx - email
> voicemail/fax - 1-866-678-3967 - toll free
>