Re: Positive Savings. Domestic demand. Inflation

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

Re. the following:

> Gunnar supposes that poor nations cannot internally
> develop a monetary system of production that is likely
> to succeed.

Comment:

This is no part of my argument.

Gunnar

----- Original Message -----
From: "John Gelles" <indexed-savings@xxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Cc: "Warren Mosler" <wmosler@xxxxxxxxxx>; "Gunnar Tómasson"
<gunnar.tomasson@xxxxxxxxxxx>; "Paul Davidson" <pdavidso@xxxxxxx>
Sent: Saturday, December 06, 2003 4:19 PM
Subject: Positive Savings. Domestic demand. Inflation


> Paul Davidson points to the obvious desire of people
> and nations to turn export earnings (all earnings, really)
> into savings and investments that hold value against the
> threat of inflation (and other calamities).
>
> Warren Mosler correctly warns that  IF  the above desire
> leads to hoarding (or stealing and hiding) hard money in
> nations where soft currency is the best they can create
> (because they do not produce for export Mercedes, oil or
> the top of the line in entertainment, drugs or weapons---all
> sure-fire sellers for dollars, euros or yen)---  THEN  such
> hoarding and stealing (by politicos and elites) is the
> problem---far more than the financial architecture that
> now supports international trade.
>
> Warren goes on to correctly remind us that nations with
> their own central banks have the means to sustain domestic
> demand no matter the illogic and poor performance of
> international trade and investment systems.
>
> Gunnar Tómasson, for some strange reason, refuses to
> credit Warren's common sense in the matter.
>
> Gunnar supposes that poor nations cannot internally
> develop a monetary system of production that is likely
> to succeed. He is no doubt influenced by socialist
> efforts at internal development that did succeed in
> making Russia the second most powerful military
> and space-capable nation on earth---but could NOT
> contain corruption-based tyranny within reasonable
> limits.
>
> So Gunnar posits that Warren's target nations will
> have to import so much modern technology, plant
> and equipment, that their monetary system of
> production will be more hobbled than ours.
>
> I say he's wrong.  Ah, but how to prove it?
>
> We ought to take Finland and Denmark---tease out
> of their adaptations of Keynesian thought, all systems
> that might work everywhere.
>             We need something between what these
>             two nations do and what Warren, myself,
>             and all believers in fiat money, "know" is
>             possible.
>
> Part of our problem, of course, is that I want to use
> fiat money that is also:
>         -  interest-free (for certain national projects),
>         -  tax-free (except for undesirable luxury or
>                     nearly-prohibited transactions),
>         -  debt-free (to the extent that government
>                     bonds are not useful for purposes other
>                     than "finding money enough to proceed"),
>                     and
>         -  inflation-protected.
>
> Warren wants plain vanilla fiat money. (I think his
> money would work---it is the minimum to do the job;
> and it has the advantage of being in use everywhere
> now.)
>
> But I want more than plain vanilla fiat money because
> it is presently burdened with taxes and interest at rates
> that scare off the rich when we talk of an increase in
> output to end poverty.
>
>             Such an increase entails sky high initial
>             investment, like we made to tool up for a
>             very big War in 1942.
>
>             If we tool up for peace today it will take
>             vast investment---somehow we must avoid
>             scaring the rich (and not so rich) with taxes
>             to leave them poor if we move ahead with
>             truly powerful Keynesian reform.
>
> Gunnar wants to protest that all money is based on
> visible credit.  So he has a problem with greenbacks.
>
> I have tried to convince him that inflation-protected
> (indexed savings) fiat money  IS  credit based---but
> the promise is NOT and IOU:
>             Behind indexed debt-free money is
>             government's promise that total pro-
>             duction and the money to buy it will
>             grow simultaneously, tracking science
>             and technology into an abundant future.
>             Much of the wealth of the new utopia
>             will be in the form of savings; but it
>             will not exceed wealth in material form.
>             And those savings will be like collectibles
>             ---we love the idea of them ---even when
>             are no more than a miser's dream come
>             true.
>
> John Gelles, miser and master of www.tiea.us
>
>
>
>