credit money

["William B. Ryan" <w_b_ryan@xxxxxxxxx>]

How does your term "availability of credit money in a
broad sense" relate to this definition of credit
money? Does your credit money differ from the one
here?
---------------------------------------
The qualification is "in the broad sense."  Our
definition is more inclusive than the one you give.
We are not simply talking of "easy money" versus
"tight money" but more imaginative ways of
introducing money.  We are more concerned with
effective demand in the hands of entrepreneurs and
consumers than the quantity of money by any arbitrary
standard measure.

We see money as tool, like hammers needed to build
houses.  You artificially limit the ability to build
houses if you limit the supply of hammers to
carpenters when we have the capability to supply all
the hammers they need to build the houses we want.
Finance is the tool that enables entrepreneurs to
build and consumers to purchase in the most general
sense.

One example of what I mean:  Money is introduced
"from the top" through Federal Reserve "open market"
purchase of Federal securities.  We would introduce
less of it from the top and more of it from the
bottom, as dividends to consumers.

In principle, the "quantity of money" and reserves in
the system could remain the same.  Yet the level of
demand made effective would increase.
--


----original message----
Thanks, Bill. Let me make sure again that I
understand what you are saying. You maintain that the
amounts of consumable goods being produced and bought
depend on "the availability of credit money in a
broad sense." You assume that this relationship is
direct and that the larger the availability, the
larger the amounts of consumable goods, up to a
point.

Thus, your image of the situation is that unless that
point is reached, the amount of consumable goods in
the market economy is lower than it could be. And you
believe that in the typical market economy, the
availability of credit money is less than would be
necessary to cause the maximum consumer goods to be
produced. The situation can be corrected, you
maintain, by increasing the availability of credit
money to the appropriate level.

Before I can proceed, I need to make sure that our
conceptions of credit money and related concepts are
the same. Credit money, as I use the term, means
money created by banks plus circulating currency. In
today's world, it presumably consists of currency
plus transferable deposits, which depositories stand
ready to convert into currency and are capable of
converting into currency. How does your term
"availability of credit money in a broad sense"
relate to this definition of credit money? Does your
credit money differ from the one here?

You should be careful when you answer this question
because the definition of credit money I use here is
not something definite and directly measurable. The
amount of it depends at least on whether certain
promises to convert transferable deposits into
currency can and will be kept.

--

--
Pat Gunning, Feng Chia University, Taiwan;
New book: UNDERSTANDING DEMOCRACY
http://nomadpress.com/public_choice/

Web pages on Praxeological Economics, Democracy,
Taiwan, Ludwig von Mises, Austrian Economics, and my
University Classes;
http://www.constitution.org/pd/gunning/welcome.htm

and
http://knight.fcu.edu.tw/~gunning/welcome.htm



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