Re: What is Creditary Economics?

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

Paul:

First, in response to my point:

In the real world of NON-COMMODITY MONEY, the amount of money "produced" is
NOT a function of "the quantity of labour applied to producing it" in the
first place.

You write:

So then the elasticity of production is zero for a noncommodity money by
defin
ition, i.e., when the demand for money increases, the demand for labor in
the
private sector to produce more money does not increase. So what's your
problem?

Comment:

Given his statement "that money has, both in the long and in the short
period, a zero, or at any rate A VERY SMALL, elasticity of production so
far as the power of private enterprise is concerned, as distinct from the
monetary authority; - elasticity of production meaning, in this context, the
response of the quantity of labour applied to producing it to a rise in the
quantity of labour which a unit of it will command,"
Keynes DOES have a problem.

For either he failed to edit out the "or at any rate a very small" bit OR he
was confused.

Second, I wrote:

Leaving aside the question whether Government Taxation 'drives'
NON-COMMODITY MONEY into the COMMODITY MONEY category, the level of
employment and output is a function of ALL kinds of production-related
CREDIT and NOT of money alone.

You respond:

Please do not conflate the Mosler-Wray definition of chartalist money --with
the Keynes -- Post Keynesian definition -- where the latter only requires
production and exchange to be organized in markets via the use of spot and
forward money contracts and the thing that is money is what the government
announces will setle contracts -- or as I put it Money is the means of
contractual settlement . [See Keynes, ch1 of THE TREATISE ON MONEY.

Comment:

The Mosler-Wray and/or the Keynes/Post Keynesian definition of chartalist
money has NO bearing on the proposition that "the level of employment and
output is a function of ALL kinds of production-related CREDIT and NOT of
money alone."

Gunnar



----- Original Message -----
From: "pdavidso" <pdavidso@xxxxxxx>
To: "Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>
Cc: <pkt@xxxxxxxxxxxxxxxx>
Sent: Monday, April 14, 2003 7:43 PM
Subject: RE: What is Creditary Economics?


> >===== Original Message From Gunnar Tomasson <gunnar.tomasson@xxxxxxxxxxx>
> =====
> >Paul:
> >
> >I wrote:
> >
> >MONEY so defined EXCLUDES the "non-chartalist institution" of
non-MONETARY
> >forms of CREDIT, which are vitally important in real-world economies in
> >general and in the less developed economies in particular.
> >
> >A case in point.
> >
> >In the "stabilization" phase of Indonesia's economic and financial
> >rehabilitation after the inflationary ravages of the late Sukarno era
(ca.
> >1966-1970), the growth of key monetary variables at rates far in excess
of
> >concurrent real output growth was consistent with rapidly decreasing
rates
> >of domestic price inflation because of (a) the RE-monetization of some
parts
> >of the economy, and (b) the monetization EX NOVO of other parts.
> >
> >You replied:
> >
> > I am sorry but I do not see your point-- I think you are trying to force
a
> >Monetarist quantity theory of money on me-- but if you read my writings
on
> >inflation you would see that i reject such an argument
> >
> >Comment:
> >
> >My point is that the TWO "essential properties" of money as defined by
> >Keynes are BOTH inapplicable in the real world.
> >
> >First.  Keynes wrote "that money has, both in the long and in the short
> >period, a zero, or at any rate a very small, elasticity of production, so
> >far as the power of private enterprise is concerned, as distinct from the
> >monetary authority; - elasticity of production meaning, in this context,
the
> >response of the quantity of labour applied to producing it to a rise in
the
> >quantity of labour which a unit of it will command."  (GT, Ch. 17)
> >
> >In the real world of NON-COMMODITY MONEY, the amount of money "produced"
is
> >NOT a function of "the quantity of labour applied to producing it" in the
> >first place.
>
> So then the elasticity of production is zero for a noncommodity money by
defin
> ition, i.e., when the demand for money increases, the demand for labor in
the
> private sector to produce more money does not increase. So what's your
> problem?
>
> >
> >Second.  Keynes wrote that "The second differentia of money is that it
has
> >an elasticity of substitution equal, or nearly equal, to zero; which
means
> >that as the exchange value of money rises there is no tendency to
substitute
> >some other factor for it; - except, perhaps, to some trifling extent,
where
> >the MONEY-COMMODITY is also used in manufacture or the arts."  (GT, Ch.
17)
> >
> >Leaving aside the question whether Government Taxation 'drives'
> >NON-COMMODITY MONEY into the COMMODITY MONEY category, the level of
> >employment and output is a function of ALL kinds of production-related
> >CREDIT and NOT of money alone.
>
> Please do not conflate the Mosler-Wray definition of chartalist
money --with
> the Keynes -- Post Keynesian definition -- where the latter only requires
> production and exchange to be organized in markets via the use of spot and
> forward money contracts and the thing that is money is what the government
> announces will setle contracts -- or as I put it Money is the means of
> contractual settlement . [See Keynes, ch1 of THE TREATISE ON MONEY.
>
>
>
> paul
>
> Paul Davidson
> Editor, Journal of Post Keynesian Economics
> University of Tennessee
> SMC 503
> Knoxville, Tennessee 37996-0550
> office phone #;(865)974-4221; office fax# (865)974-1686 or (865)974-4601
> home phone and fax # (865)692-0802
> email pdavidson@xxxxxxx
> http://econ.bus.utk.edu/davidsonextra/Davidson.html
>