A few questions

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    1)How would taxes work in a system of competing currencies. Wouldn’t this require abolishment of progressive taxing that ignores the distinction of quality vs quantity? In addition, is there a recommended book that goes into detail on this subject? The closest I have found (and read) was “Ethics of Money Production”.

    2)Warren Mosler says that Volcker exacerbated inflation, rather than reducing it due to rate hikes. He blames the 70’s inflation entirely on Volcker and Oil prices. In general the MMT proponents typically blame inflation on the goods/services side, rather than monetary. Your response?

    3.) Mike Norman (mmt’er) has stated that there is no correlation between debt and interest rates, unless you not an issuer of your currency (like Greece). His conclusion was that interest rates are a decision by the Fed.

    -Now this seems to only have credibility if we are expected to continue to expect the US treasury market
    to not trade by free market forces. Why has Japan gotten away with it for so long?

    4.) Below is a discussion between Mosler-Murphy about zero percent interest being natural, and I still don’t get it. and from an Austrian perspective, what would be the repercussions of the Fed/gov’t not “interfering” as he describes. He later calls FDIC “interference” as well.

    Bob Murphy:

    I want to carefully read up on your point about 0% interest. I’m sure I won’t end up agreeing with you, but I also don’t think I’m understanding yet where you’re coming from.

    Warren Mosler:

    It’s just the way it is with a floating exchange rate and no ‘govt. interference’ with regard to interest rates.

    So in every nation with a floating fx rate policy- US, Japan, Canada, UK, EU, whatever, if the govt doesn’t ‘interfere’ by selling treasury securities, paying interest on reserves, or anything functionally similar, the ‘risk free’ rate simply sits at 0 when that govt spends more than it taxes.

    It’s like this- govt spending is accomplished by the Fed crediting a member bank’s reserve account at the Fed.
    There’s no way for that dollar balance to earn interest in that Fed account unless the Fed pays it.


    Thanks in Advance


    1. I don’t know of a work that discusses taxes in a regime a competing currencies. Here is Bob Murphy on Hayek’s scheme for competing currencies:


    2. Changes in the purchasing power of money are determined by changes in both the money stock and demand to hold money. It’s a matter of judgment as to how much each factor contributed to a change in the purchasing power of money during some historical period. It’s never either or. Would MMTers blame the German hyperinflation of the 1920s or the Zimbabwe hyperinflation of the 2000s solely on changes from the goods side (which can only change the PPM by changing demand to hold money).

    3. The interest rate is the inter-temporal price of money. The price paid when one trades present money for future money. Any person or institution that makes a credit contract with another person or institution will pay interest to borrow present money or receive interest to acquire future money. This is true regardless of the circumstances of the inter-temporal trade, e.g., for consumer loans, producer loans, government loans, direct investment in production, and so on. The interest rate is determined by the overall demand for and supply of present money for future money. The government is both a demander of credit and the source of supply of credit, through bank credit expansion. So, it’s participation influences the interest rate. Obviously, overall supply and demand conditions can be such that the interest rate is low even though government demand is high or conditions can be such that the interest rate high even though government demand is low.

    4. The price of the inter-temporal trade of money cannot be zero because people have time preference. So Mike must be talking about something else besides the interest rate. For example, (one that he didn’t talk about) if the central bank lends money to commercial banks it can set the “interest rate” of its loans at zero. But this is not the price of inter-temporal trade of money, but a mere policy. The Fed could even pay banks to borrow funds,. but that would not be a negative interest rate.

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