Positive Savings. Domestic demand. Inflation

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

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