Dollar Bill
Raul Fletes
My son asked me the other day, if the Dollar Bill was backed by gold or
by some other metal.
I believe, once upon the time the Dollar Bill was indeed backed up by
gold. However, I believe a number of years ago we went away from the
gold standard... Am I correct? If so, what backs up our currency?
Gracias,
Raul.
Mason A. Clark
Raul, our Dollar Bill is backed by trust in God, just as
it says on the green side. There is NO other backup.
Well -- some would say trust in the future of the United
States. Relax, it's OK.
Mason A. Clark mas...@ix.netcom.com
Steve Conover, Sr.
Raul Fletes wrote:
>
> My son asked me the other day, if the Dollar Bill was backed by gold or
> by some other metal.
>
> I believe, once upon the time the Dollar Bill was indeed backed up by
> gold. However, I believe a number of years ago we went away from the
> gold standard... Am I correct? If so, what backs up our currency?
>
>
> Raul.
Raul,
Gold is just another form of money. Backing up the dollar with gold is
like backing up new poker chips with old poker chips.
The dollar is "backed up" by the economic value of the goods, services,
and knowledge produced in the USA.
--Steve
*-----------------------------------------------------------*
"In developing economies, parvenus are constantly
emerging... But in stagnant economies the same people --
and those whom they choose to admit into their ranks --
hold onto power indefinitely."
--Jane Jacobs
"Poverty has no causes. Only prosperity has causes...
Poverty can be overcome only if the relevant economic
processes are in action."
--Jane Jacobs
*-----------------------------------------------------------*
econgod
Our currency is "fiat". The only thing backing our dollar bill is the fact
that you and I accept it, and have faith in it. We moved off the gold
standard in the the 70s.
Raul Fletes <fle...@bellsouth.net> wrote in article
<32BB43...@bellsouth.net>...
John B. O'Donnell
econgod wrote:
>
> Our currency is "fiat". The only thing backing our dollar bill is the fact
> that you and I accept it, and have faith in it. We moved off the gold
> standard in the the 70s.
A mixture of truth and nonsense.
1) Our currency is fiat. (It has value because the government says it does.)
2) The current backing for the dollar is its acceptance as payment for obligations to
the government. (It takes dollars to pay taxes, otherwise they would have no value.)
3) We are off gold backing but I think we still technically use the gold standard.
(There is still a meaningless definition of the dollar as the value of some quantity of
gold.)
-- jbod
> Raul Fletes <fle...@bellsouth.net> wrote in article
> <32BB43...@bellsouth.net>...
> > My son asked me the other day, if the Dollar Bill was backed by gold or
> > by some other metal.
> >
> > I believe, once upon the time the Dollar Bill was indeed backed up by
> > gold. However, I believe a number of years ago we went away from the
> > gold standard... Am I correct? If so, what backs up our currency?
> >
> > Gracias,
> >
> > Raul.
> >
--
_____________________________________________________________________
Come visit and see a new economic perspective --
http://geocities.com/capitalhill/1067
Comments/arguments welcome.
Or, for those with little patience:
"Three Steps to Economic Freedom ~or~ How to Tax and Spend to Prosperity"
by John B. O'Donnell ($10, P.O.Box 120634, Chula Vista CA, 91912
-- jbod
Frank Palmer
The difference between a dollar bill today and a dollar bill
a century ago is this:
Today people accept a dollar bill because they know that
other people will accept dollar bills.
A century ago, people accepted dollar bills because they
knew that they could be exchanged for gold, and they knew that
other people would accept gold.
In article: <01bbf35b$106be2e0$4d5d...@ccia.ccia>
"econgod" <eco...@ccia.com> writes:
Ec> Our currency is "fiat". The only thing backing our dollar bill is the
Ec> fact that you and I accept it, and have faith in it. We moved off the
Ec> gold standard in the the 70s.
Ec> Raul Fletes <fle...@bellsouth.net> wrote in article
Ec> <32BB43...@bellsouth.net>...
> My son asked me the other day, if the Dollar Bill was backed by gold or
> by some other metal.
>
> I believe, once upon the time the Dollar Bill was indeed backed up by
> gold. However, I believe a number of years ago we went away from the
> gold standard... Am I correct? If so, what backs up our currency?
>
Every form of money is money because people will accept it.
___ Blue Wave/QWK v2.12
--
flpa...@ripco.com
Frank Palmer
Then they wouldn't be frequently asked. Now would they?
David Lloyd-Jones
On 30 Dec 1996 07:47:31 GMT, flpa...@ripco.com (Frank Palmer) wrote:
>The difference between a dollar bill today and a dollar bill
>a century ago is this:
> Today people accept a dollar bill because they know that
>other people will accept dollar bills.
> A century ago, people accepted dollar bills because they
>knew that they could be exchanged for gold, and they knew that
>other people would accept gold.
And the result is that dollar bills keep their value from year to
year, with fluctuations almost never exceeding the interest rate.
Societies so ignorant and badly organised that currencies are based on
trade in one or two commodities like silver and gold can never make
this happy claim.
-dlj.
Thant Tessman
Frank Palmer wrote:
> [...] Today people accept a dollar bill because they
> know that other people will accept dollar bills. [...]
Today people accept dollar bills because its the only form
of payment the government will accept when it comes time
to pay your taxes.
-thant
--
"It is not utopian to work for a society without taxation; it is
utopian to think that the power to tax won't be abused once it is
granted." -- Murray Rothbard
William F. Hummel
Thant Tessman (th...@shoreline-studios.com) wrote:
: Frank Palmer wrote:
: > [...] Today people accept a dollar bill because they
: > know that other people will accept dollar bills. [...]
: Today people accept dollar bills because its the only form
: of payment the government will accept when it comes time
: to pay your taxes.
: -thant
-------
I guess I'm just lucky then. The government has accepted my personal
check in payment of taxes for decades.
William F. Hummel
Warren B. Mosler
Thant Tessman <th...@shoreline-studios.com> wrote:
>Frank Palmer wrote:
>> [...] Today people accept a dollar bill because they
>> know that other people will accept dollar bills. [...]
>Today people accept dollar bills because its the only form
>of payment the government will accept when it comes time
>to pay your taxes.
>-thant
Exactly, and more, see:
Frank Palmer
In article: <32CFF7...@shoreline-studios.com>
Thant Tessman <th...@shoreline-studios.com> wrote:
Th> Frank Palmer wrote:
> [...] Today people accept a dollar bill because they
> know that other people will accept dollar bills. [...]
Th> Today people accept dollar bills because its the only form
Th> of payment the government will accept when it comes time
Th> to pay your taxes.
And why do people in Russia accept American $100 bills?
THEY can't pay taxes with them.
The naked claim that people will accept certain things,
gold often, as a medium of exchange under any circumstances;
but that they will only accept other things, bills eg., under
particular circumstances has no evidence behind it and a fair
amount of evidence against it. Yet it is frequently made.
The particular claim -- that it is taxes which drives the
acceptance of currency -- extraordinarily suspect. People who
owe no taxes accept currency.
While in-kind payments are theoretically subject to
taxation, they are much harder to document. Yet people go for
taxed currency over untaxed truck.
Warren B. Mosler
Frank Palmer wrote:
>
> In article: <32CFF7...@shoreline-studios.com>
> Thant Tessman <th...@shoreline-studios.com> wrote:
>
> Th> Frank Palmer wrote:
>
> > [...] Today people accept a dollar bill because they
> > know that other people will accept dollar bills. [...]
>
> Th> Today people accept dollar bills because its the only form
> Th> of payment the government will accept when it comes time
> Th> to pay your taxes.
>
> And why do people in Russia accept American $100 bills?
> THEY can't pay taxes with them.
The answer is almost too obvious to really believe you
don't know it. Russians can of course feel confident
that they can buy soemthing from those (Americans, for
example) who need dollars to pay U.S. taxes.
>
> The naked claim that people will accept certain things,
> gold often, as a medium of exchange under any circumstances;
> but that they will only accept other things, bills eg., under
> particular circumstances has no evidence behind it and a fair
> amount of evidence against it. Yet it is frequently made.
>
> The particular claim -- that it is taxes which drives the
> acceptance of currency -- extraordinarily suspect.
Proving that taxation is 'ncecessary' to drive a currency will
always be open to question by many, but it can be easily shown
that taxation is 'sufficient' to drive a currency, and the other
forces that drive it can be associated with the size of the
federal deficit. That is, the net financial assets of that
currency the private sector wishes to hold.
People who
> owe no taxes accept currency.
> While in-kind payments are theoretically subject to
> taxation, they are much harder to document. Yet people go for
> taxed currency over untaxed truck.
> Liquidity, portability, and all that textbook stuff.
>
> ___ Blue Wave/QWK v2.12
>
> --
> flpa...@ripco.com
> Frank Palmer
> Then they wouldn't be frequently asked. Now would they?
--
Warren B. Mosler
Director of Economic Analysis
III Finance
See:
"Soft Currency Economics"
=========================
And related documents:
Frank Palmer
* Original msg to: Mos...@gate.net
In article: <32D879...@gate.net>
"Warren B. Mosler" <mos...@gate.net> wrote:
Mo> Frank Palmer wrote:
>
> In article: <32CFF7...@shoreline-studios.com>
> Thant Tessman <th...@shoreline-studios.com> wrote:
>
> Th> Frank Palmer wrote:
>
> > [...] Today people accept a dollar bill because they
> > know that other people will accept dollar bills. [...]
>
> Th> Today people accept dollar bills because its the only form
> Th> of payment the government will accept when it comes time
> Th> to pay your taxes.
>
> And why do people in Russia accept American $100 bills?
> THEY can't pay taxes with them.
Mo> The answer is almost too obvious to really believe you
Mo> don't know it. Russians can of course feel confident
Mo> that they can buy soemthing from those (Americans, for
Mo> example) who need dollars to pay U.S. taxes.
That is to say:
We can point to people who accept dollar bills (or hundred
dollar bills) because other people will accept them.
Mosler postulates that this process would magically stop if
dollar bills were not required for tax payments.
Two hypotheses:
1) People accept dollars because others will accept them.
2) People accept dollars because other people will accept
them, but everybody would suddenly stop if it were not for tax
collectors.
Can we say "Occam's razor" boys and girls?
John B. O'Donnell
Frank Palmer wrote:
>
> * Original msg to: Mos...@gate.net
>
> In article: <32D879...@gate.net>
> "Warren B. Mosler" <mos...@gate.net> wrote:
> Mo> Frank Palmer wrote:
> >
> > In article: <32CFF7...@shoreline-studios.com>
> > Thant Tessman <th...@shoreline-studios.com> wrote:
> >
> > Th> Frank Palmer wrote:
> >
> > > [...] Today people accept a dollar bill because they
> > > know that other people will accept dollar bills. [...]
> >
> > Th> Today people accept dollar bills because its the only form
> > Th> of payment the government will accept when it comes time
> > Th> to pay your taxes.
> >
> >
> We can point to people who accept dollar bills (or hundred
> dollar bills) because other people will accept them.
>
> Mosler postulates that this process would magically stop if
> dollar bills were not required for tax payments.
>
> Two hypotheses:
> 1) People accept dollars because others will accept them.
>
> 2) People accept dollars because other people will accept
> them, but everybody would suddenly stop if it were not for tax
> collectors.
>
> Can we say "Occam's razor" boys and girls?
A very useful concept -- "What can be done with fewer assumptions is done in vain with
more" -- but, please note -- "What can be done ..." -- it's an important element of this
excellent observation. It still takes an ultimate use to impart value to money. Tax
payments are a convienient use.
John B. O'Donnell
Warren B. Mosler wrote:
>
> J
>
> > -- jbodJohn B. O'Donnell wrote:
> >
> > Frank Palmer wrote:
> > >
> > > That is to say:
> > > We can point to people who accept dollar bills (or hundred
> > > dollar bills) because other people will accept them.
> > >
> > > Mosler postulates that this process would magically stop if
> > > dollar bills were not required for tax payments.
> > >
> > > Two hypotheses:
> > > 1) People accept dollars because others will accept them.
> > >
> > > 2) People accept dollars because other people will accept
> > > them, but everybody would suddenly stop if it were not for tax
> > > collectors.
> > >
> > > Can we say "Occam's razor" boys and girls?
> >
> > A very useful concept -- "What can be done with fewer assumptions is done in vain
> > with more" -- but, please note -- "What can be done ..." -- it's an important
> > element of this excellent observation. It still takes an ultimate use to impart
> > value to money. Tax payments are a convienient use.
>
On that we agree. My comment concerned the implication from Mr. Palmer that Occam's
Razor is sufficient cause to believe otherwise. It isn't. Nor do gold/silver/seashells/
or any other substance backing do anything but divert attention from that ultimate use.
Perhaps I should not have used "convenient use" for "covenient ultimate use."
-- jbod
Warren B. Mosler
Warren Mosler
John B. O'Donnell
William F. Hummel wrote:
>
> Well, it would be an interesting experiment to determine what would happen
> to the dollar's acceptability if it were no longer required to pay taxes.
Any idea what a continental is worth? Or a confederate dollar? The "experiment has been
done many times.
> I think it is clear that Mosler's basic thesis is correct here, that the
> real underpinning of the dollar is the necessity for acquiring them in
> order to avoid confiscation of one's property in lieu of taxes. However
> there may be another key support, namely the dollar's status as legal
> tender for settling private debts. That would surely result in supporting
> the dollar to some degree, even if the government somehow disappeared as
> a taxing and spending agent.
And just who is going to enforce the acceptance of this "legal" tender?
> I cannot agree that the dollar retains its
> value as a medium of exchange merely by common consent within the private
> sector.
Then don't. You're on good ground here. Lacking the ultimate use to pay taxes, it's back
to barter, possibly standardised barter -- gold, silver, tobacco, booze, etc.
William F. Hummel
: In article: <32D879...@gate.net>
: "Warren B. Mosler" <mos...@gate.net> wrote:
: Mo> Frank Palmer wrote:
: >
: > In article: <32CFF7...@shoreline-studios.com>
: > Thant Tessman <th...@shoreline-studios.com> wrote:
: >
: > Th> Frank Palmer wrote:
: >
: > > [...] Today people accept a dollar bill because they
: > > know that other people will accept dollar bills. [...]
: >
: > Th> Today people accept dollar bills because its the only form
: > Th> of payment the government will accept when it comes time
: > Th> to pay your taxes.
: >
: > And why do people in Russia accept American $100 bills?
: > THEY can't pay taxes with them.
: Mo> The answer is almost too obvious to really believe you
: Mo> don't know it. Russians can of course feel confident
: Mo> that they can buy soemthing from those (Americans, for
: Mo> example) who need dollars to pay U.S. taxes.
: That is to say:
: We can point to people who accept dollar bills (or hundred
: dollar bills) because other people will accept them.
: Mosler postulates that this process would magically stop if
: dollar bills were not required for tax payments.
: Two hypotheses:
: 1) People accept dollars because others will accept them.
: 2) People accept dollars because other people will accept
: them, but everybody would suddenly stop if it were not for tax
: collectors.
--------------
Well, it would be an interesting experiment to determine what would happen
to the dollar's acceptability if it were no longer required to pay taxes.
I think it is clear that Mosler's basic thesis is correct here, that the
real underpinning of the dollar is the necessity for acquiring them in
order to avoid confiscation of one's property in lieu of taxes. However
there may be another key support, namely the dollar's status as legal
tender for settling private debts. That would surely result in supporting
the dollar to some degree, even if the government somehow disappeared as
a taxing and spending agent. I cannot agree that the dollar retains its
value as a medium of exchange merely by common consent within the private
sector.
William F. Hummel
John B. O'Donnell
William F. Hummel wrote:
>
> Well, it would be an interesting experiment to determine what would happen
> to the dollar's acceptability if it were no longer required to pay taxes.
Any idea what a continental is worth? Or a confederate dollar? The "experiment has been
done many times.
> I think it is clear that Mosler's basic thesis is correct here, that the
> real underpinning of the dollar is the necessity for acquiring them in
> order to avoid confiscation of one's property in lieu of taxes. However
> there may be another key support, namely the dollar's status as legal
> tender for settling private debts. That would surely result in supporting
> the dollar to some degree, even if the government somehow disappeared as
> a taxing and spending agent.
And just who is going to enforce the acceptance of this "legal" tender?
> I cannot agree that the dollar retains its
> value as a medium of exchange merely by common consent within the private
> sector.
Then don't. You're on good ground here. Lacking the ultimate use to pay taxes, it's back
Warren B. Mosler
J
> -- jbodJohn B. O'Donnell wrote:
>
> >
> > * Original msg to: Mos...@gate.net
> >
> > In article: <32D879...@gate.net>
> > "Warren B. Mosler" <mos...@gate.net> wrote:
> > Mo> Frank Palmer wrote:
> > >
> > > In article: <32CFF7...@shoreline-studios.com>
> > > Thant Tessman <th...@shoreline-studios.com> wrote:
> > >
> > > Th> Frank Palmer wrote:
> > >
> > > > [...] Today people accept a dollar bill because they
> > > > know that other people will accept dollar bills. [...]
> > >
> > > Th> Today people accept dollar bills because its the only form
> > > Th> of payment the government will accept when it comes time
> > > Th> to pay your taxes.
> > >
> > >
> > We can point to people who accept dollar bills (or hundred
> > dollar bills) because other people will accept them.
> >
> > Mosler postulates that this process would magically stop if
> > dollar bills were not required for tax payments.
> >
> > Two hypotheses:
> > 1) People accept dollars because others will accept them.
> >
> > 2) People accept dollars because other people will accept
> > them, but everybody would suddenly stop if it were not for tax
> > collectors.
> >
>
> A very useful concept -- "What can be done with fewer assumptions is done in vain with
> more" -- but, please note -- "What can be done ..." -- it's an important element of this
> excellent observation. It still takes an ultimate use to impart value to money. Tax
> payments are a convienient use.
Tax payments ARE an ultimate use. If you don't see it that way let me explain.
The common notion that the govt must raise dollars (through taxes) to be able to spend them
misses the point. Dollars can not be spent by govt unless something is for sale, and
the sellers want dollars in return. By levying a tax, payable only in dollars, the
govt causes sellers to emerge who want dollars in return. Then the govt can buy
what is offered for sale with its otherwise useless dollars. Note that, from inception,
it is an accounting identity that the govt can not collect more in taxes than it spends
or lends (looking at both the Fed and Tsy as govt).
At one time the dollar was backed by gold, and
sellers might accept dollars assuming they could cash them in for gold if they
wished. The dollar is no longer guaranteed convertible, fo course. That
leaves taxation as the primary driving force.
This is totally obvious. Adam Smith points it out. Europe monetized Africa
via money taxes, etc. Feudal Lords taxed their subjects in money rather than
in kind so the subjects would need the money and Lord could demand what he
wanted in return for the needed money.
The Confederacy used taxation to create a demand for its currency to be able
to support an army with it. (Cites from Sec Memminger are available.)
Do you 1) not get it
2) get it but aren't convinced there isn't more to it
?
Warren Mosler
>
> --
> _____________________________________________________________________
>
> Come visit and see a new economic perspective --
> http://geocities.com/capitalhill/1067
> Comments/arguments welcome.
>
> Or, for those with little patience:
>
> "Three Steps to Economic Freedom ~or~ How to Tax and Spend to Prosperity"
> by John B. O'Donnell ($10, P.O.Box 120634, Chula Vista CA, 91912
>
> -- jbod
--
William F. Hummel
John B. O'Donnell (jackod...@geocities.com) wrote:
: William F. Hummel wrote:
: >
: > Well, it would be an interesting experiment to determine what would happen
: > to the dollar's acceptability if it were no longer required to pay taxes.
: Any idea what a continental is worth? Or a confederate dollar? The "experiment has been
: done many times.
----------
I don't think so, not in the context that we have been talking about.
: > I think it is clear that Mosler's basic thesis is correct here, that the
: > real underpinning of the dollar is the necessity for acquiring them in
: > order to avoid confiscation of one's property in lieu of taxes. However
: > there may be another key support, namely the dollar's status as legal
: > tender for settling private debts. That would surely result in supporting
: > the dollar to some degree, even if the government somehow disappeared as
: > a taxing and spending agent.
: And just who is going to enforce the acceptance of this "legal" tender?
------------
The government, of course. A more careful reading of my words would have
answered this.
: > I cannot agree that the dollar retains its
: > value as a medium of exchange merely by common consent within the private
: > sector.
: Then don't. You're on good ground here. Lacking the ultimate use to
: pay taxes, it's back to barter, possibly standardised barter -- gold,
: silver, tobacco, booze, etc.
-------------
As long as the government imposes a significant tax liability on the
private sector, its dollars will be widely accepted. It is certainly
sufficient. Whether it is necessary is another question. But Mosler has
made an important observation, that the government can collect no more in
taxes than it has spent or lent.
It is also worth noting that the tax liability only need apply to a
fraction of the population to support the dollar in the entire private
sector. The larger that liability, the firmer that support.
William F. Hummel
John B. O'Donnell
William F. Hummel wrote:
>
> John B. O'Donnell (jackod...@geocities.com) wrote:
> : William F. Hummel wrote:
> : >
> : > Well, it would be an interesting experiment to determine what would happen
> : > to the dollar's acceptability if it were no longer required to pay taxes.
>
> : Any idea what a continental is worth? Or a confederate dollar? The "experiment has
> : been done many times.
> I don't think so, not in the context that we have been talking about.
And that contxt is?
> : > I think it is clear that Mosler's basic thesis is correct here, that the
> : > real underpinning of the dollar is the necessity for acquiring them in
> : > order to avoid confiscation of one's property in lieu of taxes. However
> : > there may be another key support, namely the dollar's status as legal
> : > tender for settling private debts.
A certain method of creating anarchy. The government can _ATTEMPT_ to enforce settlement
of debts with worthless paper, it could even impose severe penalties on those who choose
not to comply. But, all it would accomplish is to abolish the usefulness of government
courts and move settlements to the ??? (Mafia, street gangs, etc.)
> : > That would surely result in supporting
> : > the dollar to some degree, even if the government somehow disappeared as
> : > a taxing and spending agent.
You can hope, but such hope is without basis.
> : And just who is going to enforce the acceptance of this "legal" tender?
> The government, of course. A more careful reading of my words would have
> answered this.
I'm still looking for something other than belief.
> : > I cannot agree that the dollar retains its
> : > value as a medium of exchange merely by common consent within the private
> : > sector.
>
> : Then don't. You're on good ground here. Lacking the ultimate use to
> : pay taxes, it's back to barter, possibly standardised barter -- gold,
> : silver, tobacco, booze, etc.
> As long as the government imposes a significant tax liability on the
> private sector, its dollars will be widely accepted. It is certainly
> sufficient. Whether it is necessary is another question.
That's dependant on one's definition of money. If your definition allows substance
(standardized barter) to be considered money then it is not necessary. But, if like me,
you consider -- "Money is money only to the extent it is _NOT_ substance." -- then it
is a necessary condition.
> But Mosler has
> made an important observation, that the government can collect no more in
> taxes than it has spent or lent.
Missed this one. I can concieve of no such limitation, it is quite possible (and I think
there are even actual examples) for governments to use another sovereigns currency and
impose any level of taxation (including such as destroys itself) it choses.
> It is also worth noting that the tax liability only need apply to a
> fraction of the population to support the dollar in the entire private
> sector.
Yes.
> The larger that liability, the firmer that support.
If by that you mean the greater the tax collections the greater the quantity of currency
that can be supported or the greater its value I suppose so. But, so what?
-- jbod
Roy.Davies
"Warren B. Mosler" writes:
>
> Tax payments ARE an ultimate use.
>
>
> At one time the dollar was backed by gold, and
> sellers might accept dollars assuming they could cash them in for gold if they
> wished. The dollar is no longer guaranteed convertible, fo course. That
> leaves taxation as the primary driving force.
>
Taxation (and tribute) was a factor in the origins of money. Even in cases
where taxes were paid in kind whatever was specified by the rulers as a
suitable form of payment would tend to become useful as a medium of
exchange. See my essay:
Origins of Money and of Banking
http://www.ex.ac.uk/~RDavies/arian/origins.html
_____________________________________________________________________
Roy Davies | e-mail Roy.D...@exeter.ac.uk |
University Library | History of Money URL |
University of Exeter | http://www.ex.ac.uk/~RDavies/arian/llyfr.html |
Stocker Road | |
Exeter EX4 4PT | Financial Thrillers URL |
UK | http://www.ex.ac.uk/~RDavies/arian/linda.html |
----------------------------------------------------------------------
William F. Hummel
Frank Palmer (flpa...@ripco.com) wrote:
: What would happen to the value of the dollar if the fderal
: government could support itself without taxes?
: Assuming that this utopia were achieved without rioting in
: the streets or an H-bomb dropping, very little. Mr. Mosler
: believes otherwise. Presumably he looks upon the continued
: acceptance of the dollar as an event which would have to be
: explained.
: I look upon the sudden collapse as an event which has to
: be explained. I'm certainly willing to go first with the
: explanation, however.
: I'll state why the acceptance would continue, and hope
: that he would try to explain why the acceptance would
: evaporate.
: John Smith has a grocery store in Chicago. He buys and
: sells for dollars, has a lease denominated in dollars, a
: payroll, etc.
: Both Mosler and I agree that, so long as Fred Jones in
: Miami owes taxes that must be paid in dollars, there is a
: circulating demand, and Mr. Smith will continue to accept
: dollars for his produce.
: Fred Jones stops being taxed. What happens to John Smith?
: Well, at minimum, he needs dollars to pay his rent; he needs
: dollars to pay his bank interest. He has to accept *some*
: dollars. His employees have rent, debts, child-support
: payments; they must accept some dollars as well, so Smith can
: pay them in dollars, and needs to accept more dollars.
: If we only looked at him, he *could* go over to barter
: fairly far. (Indeed, he could go over to barter to a certain
: extent today. He doesn't.) But the stores in which his
: employees buy their clothes also must accept *some* cash. So
: Smith's payroll has a larger *nescessary* cash component.
: Smith's suppliers have their cash needs as well.
: It is impossible to go completely over to barter or
: another standard.
: It is, however, completely possible to stay on the same
: standard. As the quantity theory of money lays out, a given
: quantity of money (in a financial system of a certain
: efficiency) supports a certain level of economic activity.
: This is independent of the backing of the money, so long as it
: remains acceptable.
: Absent any contracts for future performance, the
: population can all wake up next Wednesday decided that they
: will not take dollars but will base all their transactions on
: cans of tuna fish (or cigarettes). Permit me, however, to
: doubt that they will ever do so.
: With contracts for future performance involving dollars,
: such a transformation can never be complete. An incomplete
: transformation, of course, would be enormously complex and
: confusing. The advantage for each person in the economy to
: remain on the dollar standard is clear. Their motives for
: changing are not.
----------
I'll grant that it is difficult to define a modern nation without taxes.
Nor can we really describe how the fiat dollar could exist were it not
the creation of the government. While the basic premise is thus flawed,
it is apparently accepted as starting point of this debate.
Palmer continues to defend his position by constructing scenarios that
don't address the real issue. No one is claiming that OVERNIGHT the
dollar would lose its value if taxes were to end. Also, I have stated
that the legal tender status of the dollar might be sufficient to support
its continued acceptance. But if both taxes and legal tender status were
to be removed, I think there is little doubt the fiat dollar would lose its
position as a reliable store of value or medium of exchange. However this
would happen gradually and non-homogeneously as more and more people learned
of incidents of refusal to accept the dollar at face value. Whether the
dollar ever became waste paper is hard to say without a much more detailed
definition of society under those conditions. However society would not
adopt to a primarily barter economy. My guess is that the medium of
exchange would revert to a commodity based money with private banks
issuing notes redeemable for that commodity. Just as in today's banking
system, such notes would seldom be redeemed, but would be exchanged in
the market place as paper money - but this time as COMMODITY money, not
FIAT money.
William F. Hummel
John B. O'Donnell
Frank Palmer wrote:
>
> * Original msg to: Wfhu...@netcom.com
>
> In article: <wfhummelE...@netcom.com>
> wfhu...@netcom.com (William F. Hummel) writes:
> Wf> Frank Palmer (flpa...@ripco.com) wrote:
> Wf> : wfhu...@netcom.com (William F. Hummel) writes:
>
> Wf> : The paper dollar ACQUIRED, despite Mosler's claims
> Wf> : otherwise, its acceptability as a medium of exchange because
> Wf> : it could be exchanged for previous media, gold and silver
> Wf> : coin.
> Wf> : It should be noted that dollar bills were neither issued
> Wf> : nor supported by government for much of their history in the
> Wf> : USA.
> Wf> ----------
> Wf> This ignores the distinction between commodity money and fiat money.
>
> No. We were, according to the subject line, talking about US
> currency. In Feb. 1933, this was what you call "commodity
> money." In May, 1933, it was what you call "fiat money." Any
> discussion of the dollar bill at least *may* note that it
> hardly changed in value and acceptability betwen these two
> months.
> Indeed, that is the root of this discussion. Dollars
> played *precisely* the same role as "fiat money" as they did
> as "commodity money." The claim that these are absolutely
> different things and should be discussed under different
> headers assumes what, not only hasn't been proven, but what
> every evidence challenges.
I still say frome whence it came is irrelevant to any but historians,
but now I add --
"Money is money only to the extent it is not substance."
>
> Wf> Obviously bills that could be redeemed for gold were not fiat money,
> Wf> which is what we are talking about today. And of course taxes would
> Wf> not be necessary to support the dollar when it was convertible to a
> Wf> valued commodity. But that is quite aside from the point at issue.
>
> Wf> : It is clear that removal of convertibility was accompanied
> Wf> : by neither refusal of dollars nor any concommitant increase in
> Wf> : federal taxes.
> Wf> ----------
> Wf> This is neither clear nor relevant. Fiat money did not come into
> Wf> existence with the creation of the Fed and the end of bank-issued
>
> (This is what is known as a straw man. Palmer never said, nor
> suggested that it did. Hummel, without evidence for his
> position, decides to attribute a ridiculous position to
> Palmer. Now he has a refutation.)
>
> Wf> bills. The paper dollar was still backed by gold or silver long after
> Wf> 1913. By the time convertibility finally ended, income taxes played
> Wf> an important role, as did the enforcement of the dollar as legal
> Wf> tender.
>
> Well, whether it is clear deepnds on whether one knows the
> history of the time.
> The claim to irrelevance is a refusal to look at evidence.
>
> Wf> : The lowering of tax rates (except the one which
> Wf> : accompanied price decontrol at the end of WWII) were not met
> Wf> : by proportional inflation. Nor were tax increases matched by
> Wf> : deflation.
> Wf> ----------
> Wf> The amount of tax revenues collected has nothing to do with the issue.
> Wf> What is important is that the dollar is required in payment of taxes.
> Wf> Even though only a fraction of the population may be subject to taxes,
> Wf> the fact that the dollar is the payment medium is quite enough to give
> Wf> the dollar support among all hands.
>
> Let's get this clear. I have a contractual obligation to pay
> my rent in dollars. Joe Schmoe in Oregon has an obligation to
> pay his taxes in dollars. If Joe Schmoe's obligation
> disappears, I will no longer accept dollars for my work.
> How will I pay my rent?
For as long as your rental contract is enforceable, but you'll never
get another like it. The consequence is called hyperinflation. And,
without a continuing use it wont be long before the dollars reach
zero value. (A continuing use could mean government claims whether or
not they are called taxes.)
>
> Wf> : So tax LEVELS do not affect the acceptance of dollar
> Wf> : bills.
> Wf> ----------
> Wf> Correct, and no one has argued otherwise.
I do, if you mean tax levels relative to currency availability affects
the value of the currency. But something (taxes) must give them value
in the first place before that value can be affected.
>
> Wf> : As far as the experiment has been tried, these two
> Wf> : phenomena are separate. The evidence for the hypothesis is:
> Wf> : "This experiment has not tested to the extreme, so it has not
> Wf> : been absolutely disproved, so it must be so."
> Wf> : I don't find that argument persuasive.
> Wf> ----------
> Wf> A strawman of your concoction, having nothing to do with this debate.
Strawmen are sometimes useful, but to be so it would be nice to have a
connection to reallity. This appears to be a concoction that one would find
difficult to blame on any rational person.
>
> That is *precisely* the tenor of your post.
> It *would* happen. No evidence but flat assertion. All the
> contrary evidence is "irrelevant." It is "irrelevant" that
> the dollar changed between what you claim are absolutely
> different states, states so far apart that I am told that I
> should not have mentioned them in the same post, with *NO*
> practical effect. It is "irrelevant" that changes in your
> hypothesised independent variable have no discernable effects
> on your hypothesised dependent variable.
>
> : Wf> cannot agree that the dollar retains its value as a medium of exchange
> : Wf> merely by common consent within the private sector.
>
> Wf> : Most modern money is under governemnt sponsorship. It is easy
> Wf> : to believe that without that sponsorship (via taxation or
> Wf> : legal-tender clauses) money would disappear. A good deal of
> Wf> : study, however, has been done on prisons and POW camps where,
> Wf> : for obvious reasons, there is no legal tender.
Money wouldn't likely dissappear, but it sure wouldn't be the same!
>
> Wf> : There the medium of circulation is usually cigarettes.
> Wf> : These, clearly ACQUIRE their value by their smokability.
> Wf> : Soon, however, circulating cigarettes grow stale. They lose
> Wf> : their attractiveness for consumption, but retain their use a
> Wf> : circulating medium.
> Wf> -----------
> Wf> Here you have again missed the distinction between commodity money and
> Wf> fiat money. A useless commodity like stones in the prison yard would
> Wf> never make it as a medium of exchange. But a smoke is a smoke,
>
> Here you have missed the distinction between COST and USE
> VALUE. I wouldn't trade my jar of marmelade for stones,
> because I can get stones by myself. I will trade it for
> cigarettes, because I can trade the cigarettes for chocolate.
>
> Wf> regardless of whether it is a bit stale.
>
> I'm not a smoker myself. Others are. Is Hummel right? Are
> smokers indifferent to staleness?
I was once an addict. I would not call myself indifferent to staleness,
but in a pinch any weed will do. It wouldn't have the same value as
fresh, but it would have value.
>
> Wf> However drop the pack of
> Wf> cigarettes into a bucket of water and then try to using it as money.
They will eventually dry. You really have no concept of what it is to be an
addict. Don't let your kids start the filthy habit, it really is a bitch to
quit.
> Wf> : It is hard to assert a value to them based on anything
> Wf> : other than "Common consent within the private sector." [And,
> Wf> : in POW camps, the officer and non-com sectors as well.]
It is only hard if your not and never have been an addict.
> Wf> : Money simplifes social transactions so much that people
> Wf> : are quite unwilling to forgo its use. Adam Smith, who thought
> Wf> : that coin got its value from its metallic content, remarked
> Wf> : that sellers accepted worn coin at the same value as unworn.
> Wf> ----------
> Wf> Interesting, but what is the point?
Try -- "Money is money only to the extent it is not substance."
> Wf> : Many modern sellers accept checks at face value, although
> Wf> : some will not be good. The convenience of saying "This costs
> Wf> : $14.98" outweighs the difficulties of getting slightly less
> Wf> : metal and the collection problem of bad checks.
> Wf> ---------
> Wf> Quite true, but proving nothing regarding the question of what
> Wf> supports money. Checks are a proxy for real money, which in the U.S.
> Wf> is the Federal Reserve Note. If the check is not deemed to be
>
> 1) This is not the definition of "money" usually used in
> economics discussions.
Aside from "cash and checkable deposits" and (occasionally) conveniently
convertable deposits what else do economists usually call money?
> Wf> convertible to real money, it will not be accepted. And that is true
> Wf> even though checks are seldom converted into real money.
>
> You are ignoring the *REAL WORLD* case. A merchant sees a
> check as something with a risk attached. The ENTIRETY of the
> checks that the merchant accepts returns him less than the
> sum of the face values. He does not usually charge a premium
> for the same reason that the merchants of Adam Smith's time
> did not weigh the coins that they received. He is selling for
> DOLLARS.
Interesting comparison, but totally wrong. The reduced coin is
accepted because it is money not substance, an occasional bad check
is accepted because the greater number of good checks is sufficient
to tolerate the few bad ones. If it doesn't up go the signs --
-- No personal checks accepted" -- and if that doesn't do the job;
-- No Checks accepted."
> Wf> The basic issue remains unchallenged by your arguments since you have
> Wf> dealt with commodity money rather than present day fiat money.
>
> People behave in a particular way with MONEY. They, despite
> your ignorance of the depression period, did not change the
> way they behaved when the commodity money was turned into fiat
> money.
Because they were interested in having money, not substance.
> Claims that "People would behave in an entirely new way with
> respect to money if there were no taxes," can only be dealt
> with by looking at how people behave WRT *money*.
"WRT"?
Change the statement to -- "People would behave in an entirely new
way with respect to GOVERNMENT ISSUED money if there were no taxes
OR OTHER GOVERNMENT OBLIGATIONS TO BE SATISFIED WITH GOVERMENT
ISSUED MONEY," and it would be true.
> Wf> The hypothesis that taxes are necessary to support fiat money remains
> Wf> a question that probably cannot be answered definitively because no
> Wf> experiment can be done that would provide proof.
Continentals became worthless before the U.S. government was.
That's experiment enough when there is no conflicting evidence.
> However the case
> Wf> that Mosler has made is quite persuasive and I, for one, am willing to
> Wf> accept it. The only question in my mind is whether taxes are both
> Wf> necessary and sufficient or merely sufficient to give public support
> Wf> to the U.S. dollar.
That would depend on whether you consider standardized barter --
That is, accepting a commodity in trade for its use value (Not to
be confused with a government enforced arbitrary price of a
commodity to be called money.)-- as a money trade. If you do,
then it is not neccessary, if you do not (I do not) then it
is neccessary.
- jbod-
_____________________________________________________
Come visit and see a new economic perspective --
http://geocities.com/CapitolHill/1067
John B. O'Donnell
Frank Palmer wrote:
>
> What would happen to the value of the dollar if the fderal
> government could support itself without taxes?
Probably nothing if it continued to issue and accept "dollars"
in payment for whatever service or substance it is charging for
to maintain its solvency.
> Assuming that this utopia were achieved without rioting in
> the streets or an H-bomb dropping, very little.
If you want to call it Utopia that's you business, but asserting
several unpleastnesses as possible methods of achieving such a
condition is quite offensive. Try government charging for the
services (Licenses, etc.) it provides and I might even find
"Utopia" an appropriate" appelation. Not likely, but possible.
> Mr. Mosler believes otherwise. Presumably he looks upon the
> continued acceptance of the dollar as an event which would
> have to be explained.
Mr. Mosler can speak for himself, but do you accept things
without explanation?
> I look upon the sudden collapse as an event which has to
> be explained. I'm certainly willing to go first with the
> explanation, however.
> I'll state why the acceptance would continue, and hope
> that he would try to explain why the acceptance would
> evaporate.
>
> John Smith has a grocery store in Chicago. He buys and
> sells for dollars, has a lease denominated in dollars, a
> payroll, etc.
> Both Mosler and I agree that, so long as Fred Jones in
> Miami owes taxes that must be paid in dollars, there is a
> circulating demand, and Mr. Smith will continue to accept
> dollars for his produce.
> Fred Jones stops being taxed. What happens to John Smith?
> Well, at minimum, he needs dollars to pay his rent; he needs
> dollars to pay his bank interest. He has to accept *some*
> dollars. His employees have rent, debts, child-support
> payments; they must accept some dollars as well, so Smith can
> pay them in dollars, and needs to accept more dollars.
All of which is true and will remain so throughout the
hyperinflation until all such dollar denominated contracts have
either expired or been completed. But, only a fool would enter a
new contract that would require acceptance of these soon to be
zero valued "dollars." Are you such a fool?
> If we only looked at him, he *could* go over to barter
> fairly far. (Indeed, he could go over to barter to a certain
> extent today. He doesn't.) But the stores in which his
> employees buy their clothes also must accept *some* cash. So
> Smith's payroll has a larger *nescessary* cash component.
> Smith's suppliers have their cash needs as well.
> It is impossible to go completely over to barter or
> another standard.
Ah, the wonder of time!
> It is, however, completely possible to stay on the same
> standard. As the quantity theory of money lays out, a given
> quantity of money (in a financial system of a certain
> efficiency) supports a certain level of economic activity.
> This is independent of the backing of the money, so long as it
> remains acceptable.
That's an expression of the quantity theory that's new to me.
Any suggetions where I might find such nonsense?
> Absent any contracts for future performance, the
> population can all wake up next Wednesday decided that they
> will not take dollars but will base all their transactions on
> cans of tuna fish (or cigarettes). Permit me, however, to
> doubt that they will ever do so.
Ah, the wonder of time! It just might take a few days for all
to realise there are no more contracts to be satisfied with
dollars and they are now worthless.
> With contracts for future performance involving dollars,
> such a transformation can never be complete. An incomplete
> transformation, of course, would be enormously complex and
> confusing. The advantage for each person in the economy to
> remain on the dollar standard is clear. Their motives for
> changing are not.
As are the disadvantages clear. Very little time is required
for a hyperinflation to run its course. Recognize it is not a
rapid increase in government issue of currency that causes a
hyperinflation, it is a hyperinflation that causes desperate
governments to rapidly increase their issue.
The hyperinflation comes from a loss of confidence by the great
unwashed in the government's ability to maintain value in the
currency. As more transactions are moved from credit to cash to
barter, an existing supply of official money becomes excessive
for transactions then being satisfied with that official currency.
Soon, very soon, the currency has no value.
-- jbod
John B. O'Donnell
Frank Palmer wrote:
>
> I've read (Was it in Thucydides?) that the money of Sparta was
> iron which had been specially treated to make it uselessly
> brittle. Does anyone know of the reference for that or
> whether that was true?
An interesting possibility. I've seen Roy Davies post here,
perhaps he knows. In any case, I join your curiosity.
> American Indians were supposed to use "Wampum" special beads
> or shells for money. Was that true and did they use those
> shells for other purposes?
>
> What I'm looking for here is the distinction between the
> value of commodity money being based on its _consumption
> value_ and the value being based on its _scarcity_.
That's why I distinguish between "standardized barter,"
"commodity money" and "credit money." Except for standardized
barter, I still say --
"Money is money only to the extent it is not substance."
> Clearly, these two are often related. However little the
> gold of the US went into jewellry, the value of the gold for
> jewellry was the same as the monetary value of the gold
> (modulo a small cost for melting).
The wonder of it all. There stands an entity (the government)
willing and able to buy and sell gold at an arbitrily
established price that lies somewhere between the lowest use
value (A price that would deplete all government holdings.)
and the highest (A price that would result in the government
owning all the gold in existance.) use value.
> In the Spartan case, however, it seems that a deliberate
> attempt was made to create uselessness in the monetary base
> (while keeping the scarcity by making it out of something with
> a relatively fixed value).
I doubt that. It looks to me to be an attempt to discourage
conterfeit by making the substrate difficult to produce. Much
like colored cotton strings and now micro printing.
Warren Mosler
A gold standard uses the monopolist's alternative
of setting p and letting q float. From the monopolist perspective,
taxes create
a demand for the currency. The government also sets
a price for gold, and then makes all other
purchases at market prices. The
government is then fiscally and monetarily constrained
to a policy that spends little enough on non-gold
items to insure that it
does not lose its buffer stock of gold. If the
government wants to build its gold inventory, it
must limit its non-gold spending to
the point where spending is less than the demand
for the currency created by taxation,
so the excess demand for the currency is
evidenced by gold sales to the government.
Conversely, excessive non-gold spending
results in gold sales to the private sector.
As long as the buffer stock remains, the price
of gold set by the government defines the
currency. All other prices are allowed
to float at market levels and reflect nominal
value relative to the set nominal value of gold.
From 'Full Employment AND Price Stability'
on my website.
Also:
Adam Smith (page 312, Cannan Edition):
"A prince, who should enact that a
certain proportion of his taxes should
be paid in a paper money of a certain kind, might
thereby give a certain value to this paper money;
even though the term of its final
discharge and redemption should depend
altogether upon the will of the prince."
Yes, exogenous pricing of the currency depends 'on the will
of the prince.' Same today, but the prince(gov) doesn't
realize how its money operates.
> John Smith has a grocery store in Chicago. He buys and
> sells for dollars, has a lease denominated in dollars, a
> payroll, etc.
> Both Mosler and I agree that, so long as Fred Jones in
> Miami owes taxes that must be paid in dollars, there is a
> circulating demand, and Mr. Smith will continue to accept
> dollars for his produce.
There is a source of demand.
> Fred Jones stops being taxed. What happens to John Smith?
> Well, at minimum, he needs dollars to pay his rent; he needs
> dollars to pay his bank interest. He has to accept *some*
> dollars. His employees have rent, debts, child-support
> payments; they must accept some dollars as well, so Smith can
> pay them in dollars, and needs to accept more dollars.
Yes, but the value of the dollar falls to 0, so those owed the
dollars don't even bother to collect. This type of hyper inflation
induced by the collapse of tax collection has happened many times.
> If we only looked at him, he *could* go over to barter
> fairly far. (Indeed, he could go over to barter to a certain
> extent today. He doesn't.) But the stores in which his
> employees buy their clothes also must accept *some* cash. So
> Smith's payroll has a larger *nescessary* cash component.
> Smith's suppliers have their cash needs as well.
> It is impossible to go completely over to barter or
> another standard.
In the absense of a local currency, another arises. So,
for example, the DM was used in Bosnia.
>
> It is, however, completely possible to stay on the same
> standard. As the quantity theory of money lays out, a given
> quantity of money (in a financial system of a certain
> efficiency) supports a certain level of economic activity.
> This is independent of the backing of the money, so long as it
> remains acceptable.
Cause and effect is missing in this statement. Everyone
in Brazil using the local currency didn't prevent the
value from falling. Use, or velocity, of a currency
does not establish or maintain its value.
>
> Absent any contracts for future performance, the
> population can all wake up next Wednesday decided that they
> will not take dollars but will base all their transactions on
> cans of tuna fish (or cigarettes). Permit me, however, to
> doubt that they will ever do so.
? You mean no taxes?.
> With contracts for future performance involving dollars,
> such a transformation can never be complete. An incomplete
> transformation, of course, would be enormously complex and
> confusing. The advantage for each person in the economy to
> remain on the dollar standard is clear. Their motives for
> changing are not.
They have no choice in the absense of taxation. The dollar
becomes meaningless. Friedman's helicopter drop becomes litter.
(Yes, this is an assertion.)
Deficit spending is evidence that more dollars are demanded than
just enough to pay the immediate tax, of course.
>
>
> ___ Blue Wave/QWK v2.12
>
> --
> flpa...@ripco.com
> Frank Palmer
> Then they wouldn't be frequently asked. Now would they?
--
Warren B. Mosler
Director of Economic Analysis
III Finance
See "Soft Currency Economics:"
and related documents:
(Full Employment AND Price Stability)
Frank Palmer
I've read (Was it in Thucydides?) that the money of Sparta was
iron which had been specially treated to make it uselessly
brittle. Does anyone know of the reference for that or
whether that was true?
American Indians were supposed to use "Wampum" special beads
or shells for money. Was that true and did they use those
shells for other purposes?
What I'm looking for here is the distinction between the
value of commodity money being based on its _consumption
value_ and the value being based on its _scarcity_.
Clearly, these two are often related. However little the
gold of the US went into jewellry, the value of the gold for
jewellry was the same as the monetary value of the gold
(modulo a small cost for melting).
In the Spartan case, however, it seems that a deliberate
attempt was made to create uselessness in the monetary base
(while keeping the scarcity by making it out of something with
a relatively fixed value).
Frank Palmer
Wf> Obviously bills that could be redeemed for gold were not fiat money,
Wf> which is what we are talking about today. And of course taxes would
Wf> not be necessary to support the dollar when it was convertible to a
Wf> valued commodity. But that is quite aside from the point at issue.
Wf> : It is clear that removal of convertibility was accompanied
Wf> : by neither refusal of dollars nor any concommitant increase in
Wf> : federal taxes.
Wf> ----------
Wf> This is neither clear nor relevant. Fiat money did not come into
Wf> existence with the creation of the Fed and the end of bank-issued
(This is what is known as a straw man. Palmer never said, nor
suggested that it did. Hummel, without evidence for his
position, decides to attribute a ridiculous position to
Palmer. Now he has a refutation.)
Wf> bills. The paper dollar was still backed by gold or silver long after
Wf> 1913. By the time convertibility finally ended, income taxes played
Wf> an important role, as did the enforcement of the dollar as legal
Wf> tender.
Well, whether it is clear deepnds on whether one knows teh
history of the time.
The claim to irrelevance is a refusal to look at evidence.
Wf> : The lowering of tax rates (except the one which
Wf> : accompanied price decontrol at the end of WWII) were not met
Wf> : by proportional inflation. Nor were tax increases matched by
Wf> : deflation.
Wf> ----------
Wf> The amount of tax revenues collected has nothing to do with the issue.
Wf> What is important is that the dollar is required in payment of taxes.
Wf> Even though only a fraction of the population may be subject to taxes,
Wf> the fact that the dollar is the payment medium is quite enough to give
Wf> the dollar support among all hands.
Let's get this clear. I have a contractual obligation to pay
my rent in dollars. Joe Schmoe in Oregon has an obligation to
pay his taxes in dollars. If Joe Schmoe's obligation
disappears, I will no longer accept dollars for my work.
How will I pay my rent?
Wf> : So tax LEVELS do not affect the acceptance of dollar
Wf> : bills.
Wf> ----------
Wf> Correct, and no one has argued otherwise.
Wf> : As far as the experiment has been tried, these two
Wf> : phenomena are separate. The evidence for the hypothesis is:
Wf> : "This experiment has not tested to the extreme, so it has not
Wf> : been absolutely disproved, so it must be so."
Wf> : I don't find that argument persuasive.
Wf> ----------
Wf> A strawman of your concoction, having nothing to do with this debate.
That is *precisely* the tenor of your post.
It *would* happen. No evidence but flat assertion. All the
contrary evidence is "irrelevant." It is "irrelevant" that
the dollar changed between what you claim are absolutely
different states, states so far apart that I am told that I
should not have mentioned them in the same post, with *NO*
practical effect. It is "irrelevant" that changes in your
hypothesised independent variable have no discernable effects
on your hypothesised dependent variable.
: Wf> cannot agree that the dollar retains its value as a medium of exchange
: Wf> merely by common consent within the private sector.
Wf> : Most modern money is under governemnt sponsorship. It is easy
Wf> : to believe that without that sponsorship (via taxation or
Wf> : legal-tender clauses) money would disappear. A good deal of
Wf> : study, however, has been done on prisons and POW camps where,
Wf> : for obvious reasons, there is no legal tender.
Wf> : There the medium of circulation is usually cigarettes.
Wf> : These, clearly ACQUIRE their value by their smokability.
Wf> : Soon, however, circulating cigarettes grow stale. They lose
Wf> : their attractiveness for consumption, but retain their use a
Wf> : circulating medium.
Wf> -----------
Wf> Here you have again missed the distinction between commodity money and
Wf> fiat money. A useless commodity like stones in the prison yard would
Wf> never make it as a medium of exchange. But a smoke is a smoke,
Here you have missed the distinction between COST and USE
VALUE. I wouldn't trade my jar of marmelade for stones,
because I can get stones by myself. I will trade it for
cigarettes, because I can trade the cigarettes for chocolate.
Wf> regardless of whether it is a bit stale.
I'm not a smoker myself. Others are. Is Hummel right? Are
smokers indifferent to staleness?
Wf> However drop the pack of
Wf> cigarettes into a bucket of water and then try to using it as money.
Wf> : It is hard to assert a value to them based on anything
Wf> : other than "Common consent within the private sector." [And,
Wf> : in POW camps, the officer and non-com sectors as well.]
Wf> : Money simplifes social transactions so much that people
Wf> : are quite unwilling to forgo its use. Adam Smith, who thought
Wf> : that coin got its value from its metallic content, remarked
Wf> : that sellers accepted worn coin at the same value as unworn.
Wf> ----------
Wf> Interesting, but what is the point?
Wf> : Many modern sellers accept checks at face value, although
Wf> : some will not be good. The convenience of saying "This costs
Wf> : $14.98" outweighs the difficulties of getting slightly less
Wf> : metal and the collection problem of bad checks.
Wf> ---------
Wf> Quite true, but proving nothing regarding the question of what
Wf> supports money. Checks are a proxy for real money, which in the U.S.
Wf> is the Federal Reserve Note. If the check is not deemed to be
1) This is not the definition of "money" usually used in
economics discussions.
Wf> convertible to real money, it will not be accepted. And that is true
Wf> even though checks are seldom converted into real money.
You are ignoring the *REAL WORLD* case. A merchant sees a
check as something with a risk attached. The ENTIRETY of the
checks that the merchant accepts returns him less than the
sum of the face values. He does not usually charge a premium
for the same reason that the merchants of Adam Smith's time
did not weigh the coins that they received. He is selling for
DOLLARS.
Wf> The basic issue remains unchallenged by your arguments since you have
Wf> dealt with commodity money rather than present day fiat money.
People behave in a particular way with MONEY. They, despite
your ignorance of the depression period, did not change the
way they behaved when the commodity money was turned into fiat
money.
Claims that "People would behave in an entirely new way with
respect to money if there were no taxes," can only be dealt
with by looking at how people behave WRT *money*.
Wf> The hypothesis that taxes are necessary to support fiat money remains
Wf> a question that probably cannot be answered definitively because no
Wf> experiment can be done that would provide proof. However the case
Wf> that Mosler has made is quite persuasive and I, for one, am willing to
Wf> accept it. The only question in my mind is whether taxes are both
Wf> necessary and sufficient or merely sufficient to give public support
Wf> to the U.S. dollar.
The case that Mosler has made is flat *assertion*.
Frank Palmer
What would happen to the value of the dollar if the fderal
government could support itself without taxes?
Assuming that this utopia were achieved without rioting in
the streets or an H-bomb dropping, very little. Mr. Mosler
believes otherwise. Presumably he looks upon the continued
acceptance of the dollar as an event which would have to be
explained.
I look upon the sudden collapse as an event which has to
be explained. I'm certainly willing to go first with the
explanation, however.
I'll state why the acceptance would continue, and hope
that he would try to explain why the acceptance would
evaporate.
John Smith has a grocery store in Chicago. He buys and
sells for dollars, has a lease denominated in dollars, a
payroll, etc.
Both Mosler and I agree that, so long as Fred Jones in
Miami owes taxes that must be paid in dollars, there is a
circulating demand, and Mr. Smith will continue to accept
dollars for his produce.
Fred Jones stops being taxed. What happens to John Smith?
Well, at minimum, he needs dollars to pay his rent; he needs
dollars to pay his bank interest. He has to accept *some*
dollars. His employees have rent, debts, child-support
payments; they must accept some dollars as well, so Smith can
pay them in dollars, and needs to accept more dollars.
If we only looked at him, he *could* go over to barter
fairly far. (Indeed, he could go over to barter to a certain
extent today. He doesn't.) But the stores in which his
employees buy their clothes also must accept *some* cash. So
Smith's payroll has a larger *nescessary* cash component.
Smith's suppliers have their cash needs as well.
It is impossible to go completely over to barter or
another standard.
It is, however, completely possible to stay on the same
standard. As the quantity theory of money lays out, a given
quantity of money (in a financial system of a certain
efficiency) supports a certain level of economic activity.
This is independent of the backing of the money, so long as it
remains acceptable.
Absent any contracts for future performance, the
population can all wake up next Wednesday decided that they
will not take dollars but will base all their transactions on
cans of tuna fish (or cigarettes). Permit me, however, to
doubt that they will ever do so.
With contracts for future performance involving dollars,
such a transformation can never be complete. An incomplete
transformation, of course, would be enormously complex and
confusing. The advantage for each person in the economy to
remain on the dollar standard is clear. Their motives for
changing are not.
Matt Kennel
: condition is quite offensive. Try government charging for the
: services (Licenses, etc.) it provides and I might even find
: "Utopia" an appropriate" appelation. Not likely, but possible.
What, are we going to sign up for Security-Management-Organization contracts
for "police services" like we do with health ''insurance''?
Sounds like hell to me.
John B. O'Donnell
> : several unpleastnesses as possible methods of achieving such a
> : condition is quite offensive. Try government charging for the
> : services (Licenses, etc.) it provides and I might even find
> : "Utopia" an appropriate" appelation. Not likely, but possible.
>
> for "police services" like we do with health ''insurance''?
>
> Sounds like hell to me.
Many services (Courts, police, defense, etc.) are quite possibly
best provided by government. I wouldn't go as far as describing
it as hell if they were supplied by government contract or even
private contract but, I do agree these particular services would
probably better be supplied without fee for service charges.
Licenses (as I said in the original posting) on the other hand (For
those uninitiated, "on the other hand" is a favorite phrase of
economists.) are valuable privileges provided by government. A few
particularly valuable ones are -- limited liability, broadcast,
mining and other extractions, etc.
Charging for these privileges at rates that are empiically shown to
cause the greatest rate of growth in capital and government revenue
can hardly be called oppressive. They are simply paying to society
through its government funds that would otherwise accrue as
monopoly/economic profits to the license holders. Anyone who would
rather do business without the protection of limited liability would
be free to do so. Other licences (broadcast, mining, etc.) would
simply be market determined legitimate prices for privileges that
are now arbitrary determinations of government bureaucrats.
If you look around a few of the other threads I think you may even find
I have been presenting rather consistent arguments for just such a
system of financing government.
Need any further clarification?
John B. O'Donnell
Warren Mosler wrote:
>
> A gold standard uses the monopolist's alternative of setting p
> and letting q float. From the monopolist perspective, taxes
> create a demand for the currency.
>
> The government also sets a price for gold, and then makes all
> other purchases at market prices.
An honest gold standard would set P and vary the quantity of currency
in response to the feedback signals of gold price variation. (Is that
what you mean by letting Q float, or are you claiming the quantity of
gold floats?)
Unfortunately, of all the attempts I am aware of to use a gold
standard, governments also use a form of gold backing. There is no real
market price for gold, there is only the price set by the government.
That's not a true standard, it's just the biggest kid on the block
fixing the price of gold.
> The government is then fiscally and monetarily constrained to a policy
> that spends little enough on non-gold items to insure that it does not
> lose its buffer stock of gold.
Never happen!!
> If the government wants to build its gold inventory, it must limit its
> non-gold spending to the point where spending is less than the demand
> for the currency created by taxation, so the excess demand for the
> currency is evidenced by gold sales to the government.
If only governments were so honest. But, given such a circumstance the
government would undoubtedly just raise the official price of gold.
They've done that just about every time I am aware of that those
circumstances have arisen. Care to cite an example when it didn't happen?
> Conversely, excessive non-gold spending results in gold sales to
> the private sector.
Hunh?
> As long as the buffer stock remains, the price of gold set by the
> government defines the currency. All other prices are allowed to float
> at market levels and reflect nominal value relative to the set nominal
> value of gold.
Actually, all other prices float relative to the same unit of value as
the currency. It is only the price of gold that stays nominal because
the government stands ready to buy and sell from/to all comers at the
stated price. (+ or - any seignorage)
> From 'Full Employment AND Price Stability' on my website.
Then it's time to revise 'Full Employment AND Price Stability.'
> Also:
>
> Adam Smith (page 312, Cannan Edition):
>
> "A prince, who should enact that a certain proportion of his
> taxes should be paid in a paper money of a certain kind, might
> thereby give a certain value to this paper money; even though
> the term of its final discharge and redemption should depend
> altogether upon the will of the prince."
>
> Yes, exogenous pricing of the currency depends 'on the will
> of the prince.' Same today, but the prince(gov) doesn't
> realize how its money operates.
endogenous -- 1 a: growing from or on the inside: developing
within the cell wall b: originating within the body 2 :
constituting or relating to metabolism of the nitrogenous
constitituents of cells and tissues;
exogenous -- originating from or due to external causes as
a: growing from or on the outside (`spores) b of disease: having
a cause external to the body c: of, relating to, or produced by
the metabolism of nitrogenous substances obtained from food --
(From Webster's Seventh New Collegiate dictionary -- If these
definitions have substantially changed to accommodate Basil
Moore, please let me know.)
For some unknown reason economists apparently think it gives them
a more scientific appearance if they inappropriately use terms
from real scientists. What they really mean by endogenous is
dependant variable, and by exogenous they mean dependant variable.
(Or is it vice-versa?) All of which brings up the question --
What does "Yes, exogenous pricing of the currency depends 'on the
will of the prince.' Same today, but the prince(gov) doesn't
realize how its money operates." actually mean?
>> SNIP<<
Frank Palmer
In article: <32E56B...@geocities.com>
"John B. O'Donnell" <jackod...@geocities.com> writes:
> I've read (Was it in Thucydides?) that the money of Sparta was
> iron which had been specially treated to make it uselessly
> brittle. Does anyone know of the reference for that or
> whether that was true?
> Clearly, these two are often related. However little the
> gold of the US went into jewellry, the value of the gold for
> jewellry was the same as the monetary value of the gold
> (modulo a small cost for melting).
Ja> The wonder of it all. There stands an entity (the government)
Ja> willing and able to buy and sell gold at an arbitrily
Ja> established price that lies somewhere between the lowest use
Ja> value (A price that would deplete all government holdings.)
Ja> and the highest (A price that would result in the government
Ja> owning all the gold in existance.) use value.
Actually, the use value of gold for jewelry was mostly
dependent on its monetary value. Most gold was in money or
money backing, and a woman wearing a gold chain was wearing a
certain value.
Does everybody know the story of the Princess's Aluminum
Samovar?
> In the Spartan case, however, it seems that a deliberate
> attempt was made to create uselessness in the monetary base
> (while keeping the scarcity by making it out of something with
> a relatively fixed value).
Ja> I doubt that. It looks to me to be an attempt to discourage
Ja> conterfeit by making the substrate difficult to produce. Much
Ja> like colored cotton strings and now micro printing.
Far be it from me to cite a mere Thucididese against your
profound knowledge of Spartan governement and its motives,
however:
1) One wonders what the meaning of "counterfeit" was toward
such money. It held only itself, it had no other backing.
2) If I remember correctly, the method of embrittlement was
something like heating it in the presence of vinegar. It was
hardly a secret process.
Frank Palmer
"John B. O'Donnell" <jackod...@geocities.com>
Ja> Frank Palmer wrote:
>
> What would happen to the value of the dollar if the fderal
> government could support itself without taxes?
Ja> Probably nothing if it continued to issue and accept "dollars"
Ja> in payment for whatever service or substance it is charging for
Ja> to maintain its solvency.
> Assuming that this utopia were achieved without rioting in
> the streets or an H-bomb dropping, very little.
Ja> If you want to call it Utopia that's you business, but asserting
Ja> several unpleastnesses as possible methods of achieving such a
Ja> condition is quite offensive. Try government charging for the
Ja> services (Licenses, etc.) it provides and I might even find
Ja> "Utopia" an appropriate" appelation. Not likely, but possible.
This is either a _very_ thick head, or an attempt to avoid the
issue. A social disaster might easily destroy the
acceptability of currency, whether or not the government would
continue to try to collect taxes. The absence of taxation
would not, for reasons given below, destroy the acceptability
of currency in the absence of a social disaster.
> Mr. Mosler believes otherwise. Presumably he looks upon the
> continued acceptance of the dollar as an event which would
> have to be explained.
Ja> Mr. Mosler can speak for himself, but do you accept things
Ja> without explanation?
Not like you do, obviously.
However, if someone told me that after the year 2,000, some
men would continue to be partial to women with short hair, I
would believe him. (It is a phenomenon that I can't explain
today; but that it would continue semms plausible.)
On the other hand, if someone were to tell me that the sun
would rise in the West after the year 2,000, I would demand an
explanation.
Similarly, assertions of change needs an explanation more
than assertions of continuity do.
> I look upon the sudden collapse as an event which has to
> be explained. I'm certainly willing to go first with the
> explanation, however.
> I'll state why the acceptance would continue, and hope
> that he would try to explain why the acceptance would
> evaporate.
>
> John Smith has a grocery store in Chicago. He buys and
> sells for dollars, has a lease denominated in dollars, a
> payroll, etc.
> Both Mosler and I agree that, so long as Fred Jones in
> Miami owes taxes that must be paid in dollars, there is a
> circulating demand, and Mr. Smith will continue to accept
> dollars for his produce.
> Fred Jones stops being taxed. What happens to John Smith?
> Well, at minimum, he needs dollars to pay his rent; he needs
> dollars to pay his bank interest. He has to accept *some*
> dollars. His employees have rent, debts, child-support
> payments; they must accept some dollars as well, so Smith can
> pay them in dollars, and needs to accept more dollars.
Ja> All of which is true and will remain so throughout the
Ja> hyperinflation until all such dollar denominated contracts have
Ja> either expired or been completed. But, only a fool would enter a
Ja> new contract that would require acceptance of these soon to be
Ja> zero valued "dollars." Are you such a fool?
I have shown why dollars would be continued to be accepted.
You have merely ASSERTED that those persons accepting them
would be fools. Because you have ASSERTED that they would
soon have zero value.
> If we only looked at him, he *could* go over to barter
> fairly far. (Indeed, he could go over to barter to a certain
> extent today. He doesn't.) But the stores in which his
> employees buy their clothes also must accept *some* cash. So
> Smith's payroll has a larger *nescessary* cash component.
> Smith's suppliers have their cash needs as well.
> It is impossible to go completely over to barter or
> another standard.
Ja> Ah, the wonder of time!
> It is, however, completely possible to stay on the same
> standard. As the quantity theory of money lays out, a given
> quantity of money (in a financial system of a certain
> efficiency) supports a certain level of economic activity.
> This is independent of the backing of the money, so long as it
> remains acceptable.
Ja> That's an expression of the quantity theory that's new to me.
Ja> Any suggetions where I might find such nonsense?
(Real GDP)*(Price level) = (Money supply)*(velocity of money)
> Absent any contracts for future performance, the
> population can all wake up next Wednesday decided that they
> will not take dollars but will base all their transactions on
> cans of tuna fish (or cigarettes). Permit me, however, to
> doubt that they will ever do so.
Ja> Ah, the wonder of time! It just might take a few days for all
Ja> to realise there are no more contracts to be satisfied with
Ja> dollars and they are now worthless.
It might take _more_ than a few days for all to share the
opinions which you have asserted without any evidence.
> With contracts for future performance involving dollars,
> such a transformation can never be complete. An incomplete
> transformation, of course, would be enormously complex and
> confusing. The advantage for each person in the economy to
> remain on the dollar standard is clear. Their motives for
> changing are not.
Ja> As are the disadvantages clear. Very little time is required
Ja> for a hyperinflation to run its course. Recognize it is not a
Ja> rapid increase in government issue of currency that causes a
Ja> hyperinflation, it is a hyperinflation that causes desperate
Ja> governments to rapidly increase their issue.
The process is, of course, circular. The newly-created
dollars buy less, and the government must print more to make
their same purchases.
I don't think, however, that you have cited a source for
your assertion that the cart preceded the horse.
Ja> The hyperinflation comes from a loss of confidence by the great
Ja> unwashed in the government's ability to maintain value in the
Ja> currency. As more transactions are moved from credit to cash to
Ja> barter, an existing supply of official money becomes excessive
Ja> for transactions then being satisfied with that official currency.
Ja> Soon, very soon, the currency has no value.
Once again. The process that you cite is:
It will happen.
So everybody but a few fools believes that it will happen.
So it will happen.
What you don't explain is why it will happen.
========
The other weakness of this argument is that taxation has
_nothing_ to do with it. It is asserted that I would be a
fool to accept dollars because they were about to become
useless.
But my rent is due Feb. 1; my tax payment is due April
15. Assume that the dollar is about to become useless, that I
should not accept any until I need them to make the actual
rent payment. Then the dollar is about to become worthless,
and I can get the ones that I need on April 15th in early
April.
That is to say:
1) There is no evidence presented for the collapse of value
of the dollar in the absence of taxes.
2) There is no reason presented that the presence of taxes
would prevent such a collapse.
Frank Palmer
"John B. O'Donnell" <jackod...@geocities.com> wrote:
Ja> Frank Palmer wrote:
>
[Huge snip]
>
> Let's get this clear. I have a contractual obligation to pay
> my rent in dollars. Joe Schmoe in Oregon has an obligation to
> pay his taxes in dollars. If Joe Schmoe's obligation
> disappears, I will no longer accept dollars for my work.
> How will I pay my rent?
Ja> For as long as your rental contract is enforceable, but you'll never
Ja> get another like it. The consequence is called hyperinflation. And,
Ja> without a continuing use it wont be long before the dollars reach
Ja> zero value. (A continuing use could mean government claims whether or
Ja> not they are called taxes.)
The (unsupported) claim is that people will stop accepting
dollars if the government stops demanding them as taxes.
I ask why *I* should stop accepting dollars when *I* am obliged
to pay them out.
The answer is that my landlord will *magically* stop accepting
dollars as soon as he can.
To put it another way, we have gone from "People will stop
accepting dollars," to "People, except those whose situation
we can describe, will stop accepting dollars."
We still haven't been told why.
>
> Wf> : As far as the experiment has been tried, these two
> Wf> : phenomena are separate. The evidence for the hypothesis is:
> Wf> : "This experiment has not tested to the extreme, so it has not
> Wf> : been absolutely disproved, so it must be so."
> Wf> : I don't find that argument persuasive.
> Wf> ----------
> Wf> A strawman of your concoction, having nothing to do with this debate.
Ja> Strawmen are sometimes useful, but to be so it would be nice to have a
Ja> connection to reallity. This appears to be a concoction that one would
Ja> find difficult to blame on any rational person.
Has *ANY* other evidence been posted?
The situation stands, as far as it _has_ been tested, there is
_no_ connection between the value of the currency and the
level of taxation.
You assert that, were taxation to go to zero, the value of
the currency would disappear.
the evidence for your assertion is?
> : Wf> cannot agree that the dollar retains its value as a medium of
Ja> exchange > : Wf> merely by common consent within the private sector.
>
> Wf> : Most modern money is under governemnt sponsorship. It is easy
> Wf> : to believe that without that sponsorship (via taxation or
> Wf> : legal-tender clauses) money would disappear. A good deal of
> Wf> : study, however, has been done on prisons and POW camps where,
> Wf> : for obvious reasons, there is no legal tender.
Ja> Money wouldn't likely dissappear, but it sure wouldn't be the same!
Which is shown by what evidence?
>
> Wf> : There the medium of circulation is usually cigarettes.
> Wf> : These, clearly ACQUIRE their value by their smokability.
> Wf> : Soon, however, circulating cigarettes grow stale. They lose
> Wf> : their attractiveness for consumption, but retain their use a
> Wf> : circulating medium.
> Wf> -----------
> Wf> Here you have again missed the distinction between commodity money and
> Wf> fiat money. A useless commodity like stones in the prison yard would
> Wf> never make it as a medium of exchange. But a smoke is a smoke,
>
> Here you have missed the distinction between COST and USE
> VALUE. I wouldn't trade my jar of marmelade for stones,
> because I can get stones by myself. I will trade it for
> cigarettes, because I can trade the cigarettes for chocolate.
>
> Wf> regardless of whether it is a bit stale.
>
> I'm not a smoker myself. Others are. Is Hummel right? Are
> smokers indifferent to staleness?
Ja> I was once an addict. I would not call myself indifferent to
Ja> staleness, but in a pinch any weed will do. It wouldn't have the same
Ja> value as fresh, but it would have value.
Then, one would expect that the monetary value would be less,
No? Or does the monetary value remain so long as there is any
degree of smokability at all.
> Wf> : It is hard to assert a value to them based on anything
> Wf> : other than "Common consent within the private sector." [And,
> Wf> : in POW camps, the officer and non-com sectors as well.]
Ja> It is only hard if your not and never have been an addict.
Their _use value_ has decreased. Their _monetary value_ has
not. The monetary value is due to:
1) Common consent
OR
2) ????
> Wf> : Many modern sellers accept checks at face value, although
> Wf> : some will not be good. The convenience of saying "This costs
> Wf> : $14.98" outweighs the difficulties of getting slightly less
> Wf> : metal and the collection problem of bad checks.
> Wf> ---------
> Wf> Quite true, but proving nothing regarding the question of what
> Wf> supports money. Checks are a proxy for real money, which in the U.S.
> Wf> is the Federal Reserve Note. If the check is not deemed to be
>
> 1) This is not the definition of "money" usually used in
> economics discussions.
Ja> Aside from "cash and checkable deposits" and (occasionally)
Ja> conveniently convertable deposits what else do economists usually call
Ja> money?
"Checkable deposits" and "Federal reserve notes" are quite
distinct.
> Wf> convertible to real money, it will not be accepted. And that is true
> Wf> even though checks are seldom converted into real money.
>
> You are ignoring the *REAL WORLD* case. A merchant sees a
> check as something with a risk attached. The ENTIRETY of the
> checks that the merchant accepts returns him less than the
> sum of the face values. He does not usually charge a premium
> for the same reason that the merchants of Adam Smith's time
> did not weigh the coins that they received. He is selling for
> DOLLARS.
Ja> Interesting comparison, but totally wrong. The reduced coin is
Ja> accepted because it is money not substance, an occasional bad check
Ja> is accepted because the greater number of good checks is sufficient
Ja> to tolerate the few bad ones. If it doesn't up go the signs --
Ja> -- No personal checks accepted" -- and if that doesn't do the job;
Ja> -- No Checks accepted."
> Wf> The basic issue remains unchallenged by your arguments since you have
> Wf> dealt with commodity money rather than present day fiat money.
>
Ja> "WRT"?
You used it:
Ja> with respect to
Ja> Continentals became worthless before the U.S. government was.
Ja> That's experiment enough when there is no conflicting evidence.
Was there a time that Continentals were required in taxes?
Was there a time that they no longer were?
If you can give evidence for that, Then you have some sort of
case. In the absence of evidence for that, you only have a
case of money going bad, as it did in Germany between the
Wars, (a period, one notes, when the German government was
collecting taxes.)
John B. O'Donnell
Frank,
I can crtainly appreciate the Herculian attempts to acurately attribute
posted commentary. Is there any chance you could use one of the email
programs that (nearly) automatically maintain the continuity.
Right now I'm using the Netscape mail program that comes as part of the
AT&T worldnet service. (That Markku mentioned gives him trouble on the
other end. Anyone else having problems? Either before or after I've been
putting in so many hard returns?)
I haven't tried it myself, but quite a few use this "FreeAgent" program
available at -- http://doitnow.com/freeagent.html -- and many other
download locations.
I've attempted to clarify (At least it's clearer to me.) this posting,
and will attempt to do so on your other recent messages.
__________________________________________________________________
Frank Palmer wrote:
>
> "John B. O'Donnell" <jackod...@geocities.com> wrote:
>
> > Frank Palmer wrote:
> [Huge snip]
[Including these sources --
* Original msg to: Wfhu...@netcom.com
In article: <wfhummelE...@netcom.com>
wfhu...@netcom.com (William F. Hummel) writes:
Wf> Frank Palmer (flpa...@ripco.com) wrote:
Wf> : wfhu...@netcom.com (William F. Hummel) writes:
which now become (as best I can make it) --
> Frank
> > jbod
> > > Frank
> > > : Wfhummel
> > > : > Frank
> > > : > : Wfhummel
I think that's all, except some contextual meaning contained
in the Huge (but ultimately neccessary) SNIP]
> > > Let's get this clear. I have a contractual obligation to pay
> > > my rent in dollars. Joe Schmoe in Oregon has an obligation to
> > > pay his taxes in dollars. If Joe Schmoe's obligation
> > > disappears, I will no longer accept dollars for my work.
> > > How will I pay my rent?
>
> > For as long as your rental contract is enforceable, but you'll never
> > get another like it. The consequence is called hyperinflation. And,
> > without a continuing use it wont be long before the dollars reach
> > zero value. (A continuing use could mean government claims whether or
> > not they are called taxes.)
>
> The (unsupported) claim is that people will stop accepting
> dollars if the government stops demanding them as taxes.
Not quite. The claim is that if the government stops accepting them
in payment for taxes or any other obligation to the government and
existing contracts have all been extinguished or expired, there will
then remain _NO_ value to these slips of paper.
People, being reasonably perceptive, will recognize the coming
worthlessness of the currency and will cease entering contracts that
will pay them nothing for their efforts. Except, perhaps, a few fools.
> I ask why *I* should stop accepting dollars when *I* am obliged
> to pay them out.
Accept them for as long as you are obliged to pay them out and be
grateful you can now satisfy your obligations with lower and lower
valued certificates. Also, be tolerant of those who now return the
favor and pay you what they owe with those same certificates of lower
and lower value.
> The answer is that my landlord will *magically* stop accepting
> dollars as soon as he can.
Yes. And so will you. It's the hyperinflation scenario.
> To put it another way, we have gone from "People will stop
> accepting dollars," to "People, except those whose situation
> we can describe, will stop accepting dollars."
Sort of. You apparantly found it neccessary to make the (legitimate
but trivial) point that there will exist a time during which
recognizably worthless certificates can legally satisfy outstanding
contract debts that have been written expecting payment with
certificates/credits of value. The certificates/credits have lost
value but you made no provisions to compensate.
> We still haven't been told why.
Why? Because people love magic! And because under the circumstances
cited there would be no further ultimate use for the previously valued
certificates. The process to arive at this conclusion is called
thinking.
> > > : As far as the experiment has been tried, these two
> > > : phenomena are separate. The evidence for the hypothesis is:
> > > : "This experiment has not tested to the extreme, so it has not
> > > : been absolutely disproved, so it must be so."
> > > : I don't find that argument persuasive.
> > > A strawman of your concoction, having nothing to do with this debate.
> > Strawmen are sometimes useful, but to be so it would be nice to have a
> > connection to reallity. This appears to be a concoction that one would
> > find difficult to blame on any rational person.
> Has *ANY* other evidence been posted?
This is part of the problem of lost attributions/continuity. Are you now
defending the strawman you previously (appropriately) ridiculed?
> The situation stands, as far as it _has_ been tested, there is
> _no_ connection between the value of the currency and the
> level of taxation.
Quite true, until there is no taxation or other obligations that can be
satisfied with the certificates/credits they will have some value.
(Actually, the level of taxation is one of many determinants of the level
of value but, yes, it is not the only determinant. And, it also still
stands that to change the value of the certificates/credits it is first
neccessary that they have value.)
> You assert that, were taxation to go to zero, the value of
> the currency would disappear. The evidence for your assertion is?
As noted earlier, the process I use to arrive at conclusions is called
thinking, some use it, some don't. Some even use methods such as
regurgitating the opinions of "experts."
I have been unable to sort out the following exchange so I'll leave it
here without comment.
> > : Wf> cannot agree that the dollar retains its value as a medium of
> Ja> exchange > : Wf> merely by common consent within the private sector.
And I've deleted the rest as I have difficulty passing an impass an making
sense of what follows. I do think so linearly! If there is anything of
import, pleae repost.
Roy.Davies
"John B. O'Donnell" writes:
> Frank Palmer wrote:
> >
> > I've read (Was it in Thucydides?) that the money of Sparta was
> > iron which had been specially treated to make it uselessly
> > brittle. Does anyone know of the reference for that or
> > whether that was true?
>
> perhaps he knows. In any case, I join your curiosity.
>
Yes the Spartans did use iron bars as currency, but I am afraid I don't
know about the physical properties of those bars. Their great rivals, the
Athenians originally used iron spits or elongated nails as money and when
they started using coins one of their coins, the obol of which there were
6 in a drachma, had the same value as one of the old iron spits. The
Spartans were unusualy in that they continued using their iron bars long
after most other Greek city states had switched to coins. The Romans were
also relatively slow to use coins. Up until 269 BC they used rather
cumbersome bars of bronze as currency.
> > American Indians were supposed to use "Wampum" special beads
> > or shells for money. Was that true and did they use those
> > shells for other purposes?
> >
Yes, they did use wampum as money and so did the settlers. Coins were
in short supply and therefore the colonists used various commodities
as money, e.g. wampum in New York and New England, tobacco in Virginia,
etc. You can read more about this in -
Money in North American History
http://www.ex.ac.uk/~RDavies/arian/northamerica.html
One reason for the use of wampum by the Indians or Native Americans was its
value as ornament. Similarly in some of the British colonies in west Africa
manillas which were braclets, anklets or the front part of a necklace were
used as money until after World War II.
Frank Palmer
"John B. O'Donnell" <jackod...@geocities.com> writes:
Ja> Frank,
Ja> I can crtainly appreciate the Herculian attempts to acurately
Ja> attribute posted commentary. Is there any chance you could use one of
Ja> the email programs that (nearly) automatically maintain the
Ja> continuity.
Let's get this clear. My OLR puts initials AUTOMATICALLY in
every post to which I respond. You have (by hand, as far as I
understand it) REMOVED these initials. That makes attribution
clearer. Not to me.
[Large amount of "Why doesn't everyone use the same software I
do?" snipped.]
Ja> I've attempted to clarify (At least it's clearer to me.) this posting,
Ja> and will attempt to do so on your other recent messages.
Ja> __________________________________________________________________
Ja>
Ja> Frank Palmer wrote:
>
> "John B. O'Donnell" <jackod...@geocities.com> wrote:
>
> > Frank Palmer wrote:
> [Huge snip]
Ja> [Including these sources --
Ja> * Original msg to: Wfhu...@netcom.com
Ja> In article: <wfhummelE...@netcom.com>
Ja> wfhu...@netcom.com (William F. Hummel) writes:
Wf> Frank Palmer (flpa...@ripco.com) wrote:
Wf> : wfhu...@netcom.com (William F. Hummel) writes:
Ja> which now become (as best I can make it) --
> Frank
> > jbod
> > > Frank
> > > : Wfhummel
> > > : > Frank
> > > : > : Wfhummel
Ja> I think that's all, except some contextual meaning contained
Ja> in the Huge (but ultimately neccessary) SNIP]
> > > Let's get this clear. I have a contractual obligation to pay
> > > my rent in dollars. Joe Schmoe in Oregon has an obligation to
> > > pay his taxes in dollars. If Joe Schmoe's obligation
> > > disappears, I will no longer accept dollars for my work.
> > > How will I pay my rent?
>
> > For as long as your rental contract is enforceable, but you'll never
> > get another like it. The consequence is called hyperinflation. And,
> > without a continuing use it wont be long before the dollars reach
> > zero value. (A continuing use could mean government claims whether or
> > not they are called taxes.)
>
> The (unsupported) claim is that people will stop accepting
> dollars if the government stops demanding them as taxes.
Ja> Not quite. The claim is that if the government stops accepting them
Ja> in payment for taxes or any other obligation to the government and
Ja> existing contracts have all been extinguished or expired, there will
Ja> then remain _NO_ value to these slips of paper.
Ja> People, being reasonably perceptive, will recognize the coming
Ja> worthlessness of the currency and will cease entering contracts that
Ja> will pay them nothing for their efforts. Except, perhaps, a few fools.
> I ask why *I* should stop accepting dollars when *I* am obliged
> to pay them out.
Ja> Accept them for as long as you are obliged to pay them out and be
Ja> grateful you can now satisfy your obligations with lower and lower
Ja> valued certificates. Also, be tolerant of those who now return the
Ja> favor and pay you what they owe with those same certificates of lower
Ja> and lower value.
The diferences between our analyses is just this. I point to
specific cases and show why these cases will be unwilling,
indeed almost unable, to abandon dollars. You, then, assure
us that all those cases which are, as yet, unexamined will
abandon the dollar. You still have not given any other reason
than "Well, everybody else will."
Each person has reasons not to abandon the dollar. From
this, I conclude that no-one will.
Each person has reasons not to abandon the dollar, from
this you conclude that everyone else will.
Is this a fair statement?
abandon
> The answer is that my landlord will *magically* stop accepting
> dollars as soon as he can.
Ja> Yes. And so will you. It's the hyperinflation scenario.
> To put it another way, we have gone from "People will stop
> accepting dollars," to "People, except those whose situation
> we can describe, will stop accepting dollars."
Ja> Sort of. You apparantly found it neccessary to make the (legitimate
Ja> but trivial) point that there will exist a time during which
Ja> recognizably worthless certificates can legally satisfy outstanding
Ja> contract debts that have been written expecting payment with
Ja> certificates/credits of value. The certificates/credits have lost
Ja> value but you made no provisions to compensate.
The certificates/credits have been asserted by you to have
lost value through an unexplained, magical, process;
although, as I gave concrete examples, they RETAIN value to
persons who are doing business.
> We still haven't been told why.
Ja> Why? Because people love magic! And because under the circumstances
Ja> cited there would be no further ultimate use for the previously valued
Ja> certificates. The process to arive at this conclusion is called
Ja> thinking.
I believe that last word is usually spelled "fantasising."
> > > : As far as the experiment has been tried, these two
> > > : phenomena are separate. The evidence for the hypothesis is:
> > > : "This experiment has not tested to the extreme, so it has not
> > > : been absolutely disproved, so it must be so."
> > > : I don't find that argument persuasive.
> > > A strawman of your concoction, having nothing to do with this debate.
> > Strawmen are sometimes useful, but to be so it would be nice to have a
> > connection to reallity. This appears to be a concoction that one would
> > find difficult to blame on any rational person.
> Has *ANY* other evidence been posted?
Ja> This is part of the problem of lost attributions/continuity. Are you
Ja> now defending the strawman you previously (appropriately) ridiculed?
Has any other evidence than "This experiment has not been
tested to the extreme, so it has not been absolutely
disproven," been presented for the claim that people will flee
dollars if the tax rate drops to zero.
> The situation stands, as far as it _has_ been tested, there is
> _no_ connection between the value of the currency and the
> level of taxation.
Ja> Quite true, until there is no taxation or other obligations that can
Ja> be satisfied with the certificates/credits they will have some value.
Ja> (Actually, the level of taxation is one of many determinants of the
Ja> level of value but, yes, it is not the only determinant. And, it also
Ja> still stands that to change the value of the certificates/credits it
Ja> is first neccessary that they have value.)
> You assert that, were taxation to go to zero, the value of
> the currency would disappear. The evidence for your assertion is?
Ja> As noted earlier, the process I use to arrive at conclusions is called
Ja> thinking, some use it, some don't. Some even use methods such as
Ja> regurgitating the opinions of "experts."
I suppose that the statement that "thinking" is usually
applied by people other thatn yourself to conclusions based on
_evidence_ would just be "regurgitation of the opinions of
'experts.'"
Ja> I have been unable to sort out the following exchange so I'll leave it
Ja> here without comment.
> > : Wf> cannot agree that the dollar retains its value as a medium of
> Ja> exchange > : Wf> merely by common consent within the private sector.
Ja> And I've deleted the rest as I have difficulty passing an impass an
Ja> making sense of what follows. I do think so linearly! If there is
Ja> anything of import, pleae repost.
Assertion = conclusion
That is linear. I am not sure that it is thinking.
John B. O'Donnell
Roy.Davies wrote:
> Yes the Spartans did use iron bars as currency, but I am afraid I don't
> know about the physical properties of those bars. Their great rivals, the
> Athenians originally used iron spits or elongated nails as money and when
> they started using coins one of their coins, the obol of which there were
> 6 in a drachma, had the same value as one of the old iron spits. The
> Spartans were unusualy in that they continued using their iron bars long
> after most other Greek city states had switched to coins. The Romans were
> also relatively slow to use coins. Up until 269 BC they used rather
> cumbersome bars of bronze as currency.
>
<<<< Oops, I deleted the attribution of this next. Sorry 'bout that.
> > > American Indians were supposed to use "Wampum" special beads
> > > or shells for money. Was that true and did they use those
> > > shells for other purposes?
>
> Yes, they did use wampum as money and so did the settlers. Coins were
> in short supply and therefore the colonists used various commodities
> as money, e.g. wampum in New York and New England, tobacco in Virginia,
> etc. You can read more about this in -
> Money in North American History
> http://www.ex.ac.uk/~RDavies/arian/northamerica.html
>
> One reason for the use of wampum by the Indians or Native Americans was its
> value as ornament. Similarly in some of the British colonies in west Africa
> manillas which were braclets, anklets or the front part of a necklace were
> used as money until after World War II.
Thank you. It is nice to know there is at least one reliable source on
the net.
As to the use of "wampum," and other commodities -- would you opine that
it is fair to say that the use of such commodities is better described
as a "standardized barter" economic system than a "money" system? I do
hope you can as I have quite often posted -- "Money is money only to the
extent it is not substance." -- and I would hate to have to concede
otherwise.
-- jbod
Warren B. Mosler
- I also remember reading that wampum was convertible into pelts.
- Warren Mosler