Re: Starting Point

[Warren Mosler <mosler@xxxxxxxxxxxxxx>]

> This is why, I think,
> their bond market is still intact. It would be more
> difficult
Define 'difficult' in this context.
The overnignt rate stays at 0 bid until the boj
votes higher rates.  its not an operational
issue, it's a political issue.

 for the BOJ to
> maintain rates so low if the markets did not
> cooperate, soft money theory
> notwithstanding.

Until the boj votes for a higher rate it won't go up.
And long term rates wont go up until the mkt
anticiaptes higher rates from the boj.
(and that anticipation may start happening today!)


 And, I would think that employment
> will not necessarily be
> a sign of saturation of net financial assets as
> stagflation is increasingly
> a credible scenario.

Hard for it not to be, pretty much by definition.
(see "Full Employment and Price Stability)

>
> Will people start to spend given enough savings?
If not, and they want to work no worries!
If they don't want private goods/services, let them
work
in the public sector at least until they do want
private goods/services.


> Makes one rethink some
> basics: Which comes first --supply or demand? I'm
> thinking that there are
> situations (that mix of opportunities and
> uncertainties I spoke of above)
> where supply *can* come first. After some induced
> spending, the natural
> economy takes over. But, there are other situations
> where demand *must*
> first manifest itself before capital spending by the
> private sector resumes
> without any prodding from the State. Put another
> way: Government deficit
> spending during periods when the situation is the
> latter creates more costs
> than benefits. The initial push does not "ripple"
> through the economy to the
> extent it normally would. After the first few
> transactions, the process
> comes to a halt with the amount spent in deficit,
> ending up in net financial
> assets doing no good for the economy. And, with the
> effort petered out,  one
> is left with the depressed level of activity one
> started out with.

So? at least public goods and services were produced.
Just keep doing that at least until some demand for
private stuff emerges.

The
> spending in deficit was for nothing and the net
> result was more debt left
> idle.
wrong, as above.  there was additional employment
from it and the resulting output was presumably a
benefit.

This will haunt the economy for a long time
> until the point government
> debt is paid or inflation pay for the debt.

Why/how???

In fact,
> all countries seem to
> be in a situation where it will be fiscal suicide to
> raise interest rates.

Why not leave them a japan-like 0 permanently?

> And, if inflation does show itself by cost push in
> defiance to all efforts
> to contain it, one will just have to wait until the
> storm passes. Makes one
> want to buy gold and real assets, huh?

Not until govts monetize it again, or agg demand
comes back.

warren

>
>
> ----- Original Message -----
> From: "Warren Mosler" <mosler@xxxxxxxxxxxxxx>
> To: "Gary Santos" <evs@xxxxxxxxxxxx>
> Sent: Monday, March 17, 2003 11:20 AM
> Subject: Re: Starting Point
>
>
> >
> > --- Gary Santos <evs@xxxxxxxxxxxx> wrote:
> > > In my continuing effort to appreciate the
> concept of
> > > "soft money", I have
> > > trouble with that this taxation and fiat money
> link.
> > > If the private sector
> > > continues to accumulate bonds (or, "net
> financial
> > > assets" as Warren like to
> > > say) at the rate the two deficits are growing,
> it
> > > will come to the point
> > > that the total value in bonds is worth some
> > > ridiculous number of decades
> > > worth of taxes.
> >
> > right.  if the govt 'tries' to net spend more
> > than the non govt sector desires to net save
> > the evidence will be 'upward pressure on the
> > price level.'
> >  Money's marginal value should drop
> > > as there will just be too
> > > much of it. In all currencies in history, I dare
> > > say, time and debt
> > > accumulation killed each of them one after the
> > > other.
> >
> > ok, but notice japan is still deflating even with
> > heaps more deficit spending than the US.
> > markets will 'tell us' when your 'saturation
> points'
> > are being tested.  unemployment is good evidence
> > there is mucho slack.
> > warren
> >  (At least, today we
> > > are candid enough to rationalize that fiat's
> value
> > > is tied to its use as
> > > tender for taxes. Warren, I am still reading the
> > > article you pointed me to.)
> > >
> > >
> > > ----- Original Message -----
> > > From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
> > > To: <pkt@xxxxxxxxxxxxxxxx>
> > > Sent: Sunday, March 16, 2003 2:53 AM
> > > Subject: Re: Starting Point
> > >
> > >
> > > No, taxation is what give value to money.  More
> of
> > > it or less of it
> > > depends on the size and direction of the
> economy,
> > > and nothing else. Only
> > > if taxation is out of sync with the economy
> would it
> > > be a pain.  This is
> > > true in both capitalism and socialism.
> > >
> > > Henry C.K. Liu
> > >
> > > Harry Veeder wrote:
> > > >
> > > >>From: Robert Williams <vic93@xxxxxxxxxxxx>
> > > >
> > > >
> > > >>A more open definition other than "The
> economy"
> > > equals "A Market".
> > > >>would let you see beyond the Classical dead
> > > endmarket = economy.
> > > >>Polanyi considered taxation a part of the
> > > Transaction Mode
> > > >>he named Redistribution.
> > > >
> > > >
> > > > Yes. Taxation is like physical pain. Sometimes
> we
> > > desire more of it
> > > > sometimes we desire less of it.
> > > >
> > > > Harry Veeder
> > > >
> > > >
> > >
> > >
> > >
> > >
> > >
> >
> >
> > =====
> > http://www.mosler.org
> >       http://www.moslerauto.com
> >
> > Primary email contact:  wmosler@xxxxxxxxxx
> >
> > __________________________________________________
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>
>


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