Deflation, devaluation, defense

["John Gelles" <indexed-savings@xxxxxxxxxxxxx>]

  POVERTY, EMPLOYMENT, LIQUIDITY, INTEREST,

SPENDING, SAVING, TAXES, FOREIGN EXCHANGE, 

    AND FREEDOM -- ARE WE AT OUR WIT'S END?

 

PKT is stirring as talk of deflation, and devaluation of

one's own currency to protect domestic suppliers,

has everyone's attention.

 

PKT is supposed to insist that market fundamentalism

can and does demonstrably fail to solve social and

environmental disorders -- especially poverty, unem-

ployment and safeguarding earth for future generations.

 

Anti-PKT insists that governments in their parliaments

and executive bureaus are stupid, corrupt and unable

to create the supply of goods and services that "markets"

create automatically -- moreover, governments cannot

even "manage" a "market economy" better than it can

manage itself.

 

Now the truth is obvious too all -- PKT is correct. People

are forced to look to government to improve outcomes

of any and all free markets.

            And Anti-PKT is correct -- government cannot

EASILY  improve outcomes.  Management of a market

economy by government is only slightly easier than 

management of a command economy.

 

Yet  "only slightly easier"  is enough to decide the case.

 

The logic that really counts is that  UNTIL  government

can successfully manage a market economy it is high

folly to try to abandon freedom and move directly to a

government managed command economy.

 

Now does the above logic help -- YES  if it keeps us

from biting off more than we can chew.  But  NO  if we

think it can solve the vital details of design for anti-poverty,

anti-deflation, anti-hyperinflation, progressive programs to

supply more and more products and services in a greener

and greener world.

 

We can certainly be sure that defeating deflation is a

snap:  Spend money!   Who?  Government.   

            And lower taxes!  Whose taxes?  Taxes on people

who cannot afford to pay them. 

            And, also, taxes that impair private investment that

appears to want to increase useful supply.

 

What about foreign exchange?  Can it be left to internal

market self-correction?  If not, can national governments

impose rules (or sign treaties) that will improve the way

traders arrive at currency prices?  Should they?  

            In my view, once we have learned to end poverty,

unemployment, and shortages of goods and services,

especially those on which national and environmental

defense depend, we can worry about foreign exchange.

            However, changes, in how government regulates

or taxes foreign exchange trading, that are required to

learn to do all the above have to be promoted as they are

discovered.

            At the moment it seems that any government

willing to manage its markets -- especially its money and

tax regimes -- will have no trouble with foreign exchange.

            If it does, the trouble will be the absence of self-

sufficiency government was unable to overcome by

partnerships with suppliers of vital missing resources.

 

        John Gelles