tag:blogger.com,1999:blog-6704573462403312459.post7447178872186065852..comments2024-03-29T02:53:03.321-04:00Comments on Moneyness: Sproul v GlasnerJP Koninghttp://www.blogger.com/profile/02559687323828006535noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-6704573462403312459.post-45864417805542786622012-06-09T00:30:30.544-04:002012-06-09T00:30:30.544-04:00JP:
If there were no channels for dollars to ever...JP:<br /><br />If there were no channels for dollars to ever reflux to the issuer, then that is equivalent to removing all backing, so the dollar will lose all value. Keep in mind that I said no channels, ever---meaning that even if the Fed is liquidated in 200 years, dollars won't be redeemed for anything even then.Mike Sproulhttp://www.csun.edu/~hceco008/realbills.htmnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-62382431902872630962012-06-05T17:37:52.756-04:002012-06-05T17:37:52.756-04:00Mike, here is the reformulated question:
"If...Mike, here is the reformulated question:<br /><br />"If the US government ceased accepting Federal Reserve-issued liabilities to settle taxes and, say, required gold instead, and the Federal Reserve also did no sell used desks (or any other object or service) for Federal Reserve liabilities, would the US dollar lose its value?"JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-4471656719064265632012-06-04T15:59:37.312-04:002012-06-04T15:59:37.312-04:00Hi JP:
Now that I think about it, I'd say tha...Hi JP:<br /><br />Now that I think about it, I'd say that if paper dollars were no longer accepted for taxes, then the dollar would hold its value as long as some other channel of reflux remained open. So if the government sometimes sold used desks in exchange for paper dollars, then that open channel of reflux might be enough to maintain the value of the dollar. A chartalist (and maybe David) would reply that those desks created a demand for paper dollars and thereby gave them value. So we're back to me saying that backing matters and them saying that money demand matters, and it becomes hard to think of a question that would distinguish our views. But I'd say in defense of the backing view that the same 'demand' arguments could be used to claim that shares of GM stock have value because there is a demand for GM stock. Since that's clearly inferior to the view that GM stock has value because of GM's assets, I think that by extension we could say that the demand view is also an inferior explanation of the value of money.<br /><br />I didn't know David when I was at UCLA. I started grad school in 1978. We must have had a lot of the same professors (Alchian, Demstez, Hirshleifer, Thompson, Darby, Leijonhufvud), but the only monetary theory I ever heard from any of them was the quantity theory. There was never any mention of the backing theory, although Thompsom once mentioned the Law of Reflux.Mike Sproulhttp://www.csun.edu/~hceco008/realbills.htmnoreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-85935228736104644402012-06-04T09:58:18.407-04:002012-06-04T09:58:18.407-04:00Hi Mike, good to hear that I have managed to under...Hi Mike, good to hear that I have managed to understand your arguments. <br /><br />David once mentioned that you both attended UCLA. If so, that might explain your similarities?<br /><br />I too am looking forward to hearing more from David on fiat money. I'm sure he'll have a post on it one of these days that we can chime in on.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-7424035648745843432012-06-03T20:14:18.127-04:002012-06-03T20:14:18.127-04:00JP: You're right about my position. Now let&#...JP: You're right about my position. Now let's hope that David lets us know his position. Of the people that I most enjoy arguing with, (mainly David, Nick Rowe and Scott Sumner) David's position definitely seems closest to my own. I think that's mostly a result of his deep understanding of the Law of Reflux.Mike Sproulhttp://www.csun.edu/~hceco008/realbills.htmnoreply@blogger.com