Re: Putting Chartalism In Its Place?

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

William:

Re. the following:

> Fungible credit money depends on the promise that it can be converted
> at par to fiat money on demand.  You should therefore explain how a
> national fiat currency and the credit it supports can long exist
> without taxation.

Comment:

In my view, there is NO essential distinction between "credit money" and
"fiat money".

In both cases, the issuer - non-government and government - puts IOUs into
circulation in the current period for redemption in a future period.

In both cases, the issuer - non-government and government - receives 'real'
value in the current period and returns 'real' value in a future period.

In the case of non-government issuers - entrepreneurs - final output of
goods and services represents such future 'real' value.

In the case of the government - the IRS - notice of tax payment due
represents such future 'real' value.

In the case of non-government issures - entrepreneurs - final output of
goods and services 'drive' money.

In the case of the government - the IRS - taxes 'drive' money.

The symmetry between non-government and government issuers IOUs breaks down
in this respect:

Without entrepreneurs - production - there would be NO 'real' value to be
exchanged for the government's IOU in the current period.

Without the IRS - government - there would be 'real' value to be exchanged
for non-government IOUs in the current period.

If all that is so, Chartalism would seem to be born of an urge to apologize
for the existence of government and taxation!

Gunnar



----- Original Message -----
From: "William F Hummel" <wfhummel@xxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Saturday, September 13, 2003 2:27 PM
Subject: Re: Putting Chartalism In Its Place?


> Gunnar:
>
> >Re your comments:
> >
> >All time-consuming production of goods and services is predicated on
> >Credit - in one form or another.
>
> Agreed.
> >
> >That is to say, Credit - "money" - precedes, and is pre-condition, for
> >Government Taxation.
>
> Credit that precedes government taxation becomes fungible with
> government fiat money only by government decree.  So your argument
> applies only to local (credit) money.  It does not address the subject
> of chartalism, which has meaning only in the context of a _national_
> currency.
>
> Fungible credit money depends on the promise that it can be converted
> at par to fiat money on demand.  You should therefore explain how a
> national fiat currency and the credit it supports can long exist
> without taxation.
>
> William
>
>
>
>
>